San Francisco, CA (PRWEB) January 17, 2013
It is often said that everything is bigger in Texas, but according to Herb Weitzman, chairman and CEO of The Weitzman Group, one thing is definitely getting smaller in Texas – retail shopping center footprints. He claims that the retail industry in Texas is evolving, as more consumers shop online and more retail stores dramatically scale back on the size of their brick and mortar stores. This evolution is leading to a different set of real estate needs.
“With the continuing growth of online shopping, expect to see the same trend play out across the country as retailers focus more on their growing online businesses,” said Terry Robinson, president of Genesis Capital. “One area that could benefit from this shift is the warehouse sector, as retailers move to warehouse space rather than the traditional store space."
Mr. Weitzman pointed to Office Depot as just one example of the trend towards smaller stores. It has reduced it’s real estate requirements from an average of 30,000 square feet per store to roughly 15,000 square feet per store, a move that puts an estimated 880,000 square feet of space back on the market in North Texas alone.
"Almost every power retailer is rolling out smaller stores today," Weitzman said, adding that Target, Walmart, Old Navy and other retailers are also trimming real estate needs.
The last 10 years have seen internet sales more than triple, from 1.5 percent of total sales in 2002 to 5 percent of total sales in 2012. That number is expected to double once more to 10 percent of sales by 2016. That is roughly $327 billion in online sales.
With sales moving from brick and mortar stores to online, we can expect to see smaller stores. This is especially true for the large shopping centers that cater to the big box retailers.
Also expect to see property owners continue to renovate existing retail space to become more attractive to the new type of tenant. Weitzman says these renovating owners can expect 10 percent returns, which isn’t too bad. He knows what he’s talking about as The Weitzman Group has already renovated several retail properties such as Flower Mound Town Center and Golden Triangle Mall.
"There's an opportunity to fill up our existing retail centers before the next wave of new construction," Weitzman said.
Weitzman says he remains bullish on Texas and if retailers and property owners proceed with caution this year, there's opportunity to be had in Dallas-Fort Worth.
About Genesis Capital
Genesis is a dynamic nationwide network of seasoned commercial real estate and financial professionals that believe in the potential of today’s market. Our members source assets directly from Banks, Servicers, Lenders and Private Clients. The members of Genesis have participated in commercial real estate transactions totaling nearly $7 billion.