We are gearing up for the ever-important RECon event in Las Vegas put on by ICSC every year this month. One of the hottest commercial real estate markets in the country is Texas, which is no secret, but the retail real estate sector is included in that great performance. Two of our professionals, Suzette Hinds and David Kilgo from GRS Group, both based in Dallas, recently got a perspective on how strong the market is while attending a Marcus & Millichap event in their home city. They took some time to share their thoughts with us.
The market for commercial real estate is obviously strong in your area. Is it the same for retail?
David Kilgo: People have the same attitude toward Texas retail as they do for multifamily. They think there’s a five-to-seven-year window while rates are so low that it is a great opportunity to acquire assets. The general attitude was that it is a good time to be out there looking for good properties.
Suzette Hinds: And a lot of people are trying to find a new way of inventing the wheel from the standpoint of making it better than it already is. We talked to some people from Chipotle, and they are putting out new products, so that is their way of getting people in the door and coming out and expanding.
One of the sessions was on rebuilding, so crafting redevelopment was a way to either reuse existing properties or better the retail opportunity in that location.
Does it seem like there is any ground-up building, or is it mainly redevelopment?
Hinds: It’s both. They’re doing ground up because people are finding land here, but construction costs are going up. The costs have risen because so many people are building at the same time.
Kilgo: New construction is probably slightly hedging the other opportunities, and I agree.
Is most of the redevelopment mixed use or stand alone?
Hinds: Again, it’s both. You have neighborhoods where you have mixed-use development because of the location, and then you clearly have some stand-alone retail development that are going into a shopping-center format or a stand-alone pad on one.
Kilgo: One of the things that they talked about in the downtown Dallas area is people putting in more multifamily and surrounding it with grocery stores and strips centers and making it more convenient for the people that live there not have to go outside of a mile radius. But it is both.
Did you hear much about grocery competition?
Hinds: We have so many, not just specialty grocery stores, but big full-service chains. And Trader Joe’s is here now. The specialty stores really fit a niche market, and they are very oriented to the location.
And you guys mentioned Chipotle. Was there a lot of talk about fast-casual restaurant chains?
Kilgo: Right now in both Los Angeles and New York City, there are some exciting concepts that do fast-serve brick-oven pizza. All of the ingredients will be in front of you, and they will make it to order and get cooked in 90 seconds. Quality, fast, convenient and price-right are the keys.
What are your clients asking for in the retail arena right now?
Kilgo: What they are asking for is to limit the amount of touches they have on their end. Marcus & Millichap and other firms in Dallas like being able to contact either Suzette or myself, start at the very beginning, get title in place and then move to ALTA surveys and other services through a single point of contact that fulfills all of their needs. It cuts down the time they have to spend of the phone and the time they have to spend using numerous vendors. That’s what they like. We can save them time and effort.
Hinds: I recently spoke to a family trust that likes to invest in several property sectors. Since there are only three of them, they don’t have a staff that can track down everything. So they look to us like their in-house real estate department.