The commercial real estate landscape in Fort Worth is thriving despite some blips in retail due to the changing behavior of shoppers and growing competition.
But a bright spot in the Fort Worth retail market is the opening of several new upscale stores in the Clearfork development, including a Tesla auto showroom.
Experts offered some insight and predictions on the local commercial real estate market, painting a largely rosy picture of the current landscape at a Business for Breakfast Series session on Aug. 23 sponsored by the Fort Worth Business Press.
One of the biggest challenges is the retail industry and it’s a national as well as local situation arising from being “over-stored,” said Steve Coslik, chairman and CEO of the Woodmont Co., the Fort Worth-based property management company that manages about 20 million square feet of retail shopping centers, enclosed shopping malls and outlet centers in 22 states.
“Retailers are going through a terrifying challenge right now,” he said. So far this year, more than 4,000 closings have occurred across the county and by the end of the year 10,000 stores are expected to close.
And other stores are downsizing. Kohl’s has announced plans to reduce the size its stores nationwide by about half, Coslik said. On Aug. 22, Kohl’s announced it will open four small format, 35,000-square-foot stores and many existing stores will have their interious layouts redesigned, resulting in nearly half of Kohl’s stores being operationally smaller by the end of the year.
Furthermore, malls are failing as they lose their anchor stores and the retailers who accompany those anchors are disappearing as well, Coslik said. He predicted that Ridgmar Mall is in danger of failing and the property being redeveloped for another use, possibly residential. Ridgmar Mall’s owners, GK Development, recently opened a SeaQuest Aquarium at the site and has engaged InPlace Design to help redevelop the mall.
But the problem isn’t just the rise of online shopping, he said, because “91 percent of people still want to go in and touch, feel and see the merchandise they are buying.”
To be successful requires an integrated system that allows shoppers to buy online but return merchandise to a brick-and-mortar store, an approach known as omni-channel. Retailers who employ onmi-channel in their business plans will be the survivors, Coslik said.
Another big trend in retail is the rise of discount shopping that began during the Great Recession and has carried forward. Stores such as TJ Maxx, Marshall’s and Ross are all thriving, with TJ Maxx planning to open 260 new stores during 2018, Coslik said.
In Fort Worth, the popularity of discount stores will bring the opening of a new Tanger Outlet Mall in the Alliance area as well as another shopping center near Texas Motor Speedway that will include TJ Maxx, Ross or both.
Grocery stores face similar challenges, particularly in the Dallas-Fort Worth area, which Coslik called the most “over-retailed grocery store market in America.”
“At the end of the day, if you’re not a great grocery operator, you’ve got to hit the road,” Coslik said.
Like the rest of the retail market, prices dictate success. The German grocery chain Lidl is planning to move into the DFW market to try to undercut current discount leader Aldi, which beats Wal-Mart’s prices by about 20 percent.
“So there’s going to be a lot of disruption,” Coslik said. “The consumer is going to benefit.”
Despite the race to offer the lowest prices, top-tier retail centers such as The Shops at Clearfork will thrive, Coslik predicted.
Clearfork is a partnership between Simon and Cassco Development Co. to bring high-end retail to the sprawling master-planned, mixed-use development in southwest Fort Worth.
Twelve new stores will open in September to join Neiman Marcus, which opened a 90,000-square-foot store in February as the first tenant at the Shops at Clearfork. The newcomers include Alex and Ani, Mill No. 3, Evereve, Apricot Lane Boutique, Pandora, Joy Macarons, Sunglass Hut, Climate and Toni & Guy.
The 500,000-square-foot, open-air center will offer a mix of luxury apparel, jewelry, home furnishings and restaurants. Office space will also be part of the mix. The center will eventually include retailers such as Louis Vuitton, Burberry, Tiffany & Co., Mitchell Gold + Bob Williams, Z Galleries, Arhaus and Tesla.
Paxton Motheral, vice president of Cassco Development Co., said the visitor experience at Clearfork will set it apart from other retail and mixed-used developments. Besides an 18-screen AMC movie theater and a Pinstripes bowling and bocce ball venue, the development includes a wellness and fitness area known as The Trailhead, which will offer fitness classes as well as a bike shop, cafe and other family-friendly activities such as art classes, bird-watching and a farmers market. Artwork, such as the windmill, a permanent sculpture installation, by Brooklyn artist Tom Fruin, create an environment that draws visitors by creating an experience.
“Getting people to come to Clearfork, community engagement, that’s really been our big focus,” Motheral said. “We’re trying to differentiate.
“What we’re doing at Clearfork is more than just the buildings and shops. It’s about the experience that you’re creating for your customer. You can buy almost anything online today but people still enjoy watching other people and interaction.”
Andy Taft, president of Downtown Fort Worth Inc., said one of the biggest changes downtown is the number of people who choose to live there. And there are as many people under 40 as over 40 living in apartments and condos there, he said.
“It’s clean, it’s safe, it’s exciting,” Taft said. “There is a live, work, play environment that we’ve been promising for 40 years but we’ve finally delivered on in downtown that is centered on Sundance Square but is spreading beyond. We’ve seen it start to take root very successfully in West Seventh and the near Southside.”
Up and coming is redevelopment in the Race Street area and the Trinity River Vision Panther Island project.
Taft said strides being made by the Fort Worth Independent School District with construction of a combined high school for performing arts and STEM (Science, Technology, Engineering and Math) academy will make downtown even more attractive to families as a place to live.
Building affordable apartments and condos, both in high demand, are among the challenges for downtown planners and economic development officials, he said.
Meanwhile the downtown hotel market is booming, increasing the demand for convention business. More and bigger conventions are seeking out Fort Worth but the occupancy rate is still tight and rooms aren’t always available, he said.
The six downtown buildings that XTO plans to vacate when it moves its energy division to Houston have had many lookers, particularly multi-family and hotel developers, Taft said.
The Platinum Sponsors for Business for Breakfast are Plaid for Women and North Texas Community Foundation. The Gold Sponsor for this event was Pogue Construction.