Monday Morning Scoop - 5 Fast-Growing Retailers Are Doubling Down On Dallas-Fort Worth
5 Fast-Growing Retailers Are Doubling Down On Dallas-Fort Worth
New retail trends are emerging in the Dallas-Fort Worth market as inflation-weary consumers adjust to a post-pandemic world.
Vacancies have continued to wane since widespread shutdowns caused a slew of businesses to go belly up more than two years ago, according to midyear data from Weitzman. Retail occupancy was at 93.6%, up from 92% at the same time last year and on par with the 93.5% occupancy recorded at the end of 2021, per the report.
Despite an overall lift in the market, some retailers are performing better than others, and those differences tend to break down along sector lines. Gyms and health-focused restaurants, for example, are seeing a boost post-pandemic as consumers place a greater emphasis on wellness.
“People are becoming slightly more health conscious,” Advisors Commercial Real Estate partner Phillip Hooks Jr. said. “Coming out of the pandemic, we have to take care of ourselves, so people are paying more attention to what they consume and their immune systems.”
Other trends are driven by demographic shifts specific to DFW. The Metroplex’s population is booming as residents live longer and business relocations bring more people to Texas. This is spurring demand for basic services, such as grocery stores, with brands like H-E-B expanding into North Texas.
“People continue to move here, demographics continue to be very diverse, and grocery stores have taken note,” Hooks said.
Shorter-term phenomena are also swaying retail trends. A recent report by foot traffic analytics firm Placer.ai found that inflation is driving consumers toward lower price options, giving a leg up to discount retailers like Dollar General. That brand’s most recent spinoff, pOpshelf, is making waves in the DFW market with 13 locations either now open or coming soon.
“[POpshelf] is a great traffic driver,” Liz Crawford, vice president of planning for TPN Retail, told RetailWire. “It’s Target for lower-income or budget-conscious shoppers.”
To meet these unique consumer demands, the following businesses are rapidly expanding in DFW. Residents can expect to see more locations break ground as companies seek to reap the benefits of the Metroplex’s growing customer base.
Few brands new to the Metroplex have generated as much excitement as H-E-B. When its flagship DFW location opened in Frisco earlier this week, people began lining up 12 hours in advance. The store was crammed with customers by 7 a.m., and one manager told WFAA it was the longest grand opening line he had seen yet.
The renowned San Antonio-based grocery chain, which has more than 400 locations across Texas and Mexico, has for years held off on a DFW debut. Instead, it honed in on its gourmet concept, Central Market, which has been a Dallas staple for more than 20 years.
When H-E-B finally set its sights on DFW, it went big. In the coming months, more locations are expected to open in Plano, Allen, Mansfield, McKinney and Melissa.
H-E-B also owns land in several other areas, though it has yet to confirm whether those sites will be developed. The company has a reputation for holding onto undeveloped land for long periods of time, which tends to generate skepticism among communities over whether they will ever receive a much-desired H-E-B.
Dutch Bros Coffee
Drive-thru coffee purveyor Dutch Bros Coffee is plowing through the Metroplex with 27 locations now open and nine coming soon.
The business debuted its first DFW location in McKinney last May, according to Eater. In addition to its customizable coffees and teas, energy drinks and smoothies, Dutch Bros offers next-level convenience, which Hooks said is especially valuable to consumers post-pandemic.
“I don’t have to get out of my car, I can use my app and accumulate points, and I’m in and out,” he said. “It’s just an efficient model.”
When Dutch Bros went public in September, it was the biggest IPO in Oregon history, raising about $484M, per Oregon Live. Its ardent following has inspired confidence among both consumers and industry stakeholders, Hooks said, with locations trading at cap rates of 4.25%, significantly lower than typical 6% to 6.5% for similar brands.
Salad and Go
Another drive-thru-only concept making a splash in the Metroplex is Salad and Go, a fast-casual eatery focused on nutritious food at an affordable price. The business announced plans in late August to debut seven new locations in September alone, adding to the 13 branches already open across DFW.
“Each of these North Texas cities we’re expanding into in the coming month are homes to rapidly growing communities made up of busy working professionals, students and health-focused individuals — all of whom stand to benefit from what Salad and Go brings to the table,” CEO Charlie Morrison said in a statement.
The brand has a goal of doubling its network to 90 locations by the end of this year, and then doubling again by the end of 2023, per a release. Salad and Go is another emerging company with momentum so strong its cap rates rival those of well-established, fast-casual juggernauts, like Starbucks and Chipotle, Hooks said.
“I last saw one that sold at a 5.5% cap rate,” he said. “That tells you the strength of that operation, or rather, the demand in the DFW trade area for that specific group.”
Strong leasing demand in DFW, especially for space in existing centers, is eating up space left behind during the pandemic, according to Weitzman. New Dollar General concept pOpshelf, which opened its first DFW store in McKinney in April, has gone on to backfill Pier 1 vacancies in Allen, Rockwall and Watauga.
The company also has stores in Frisco and Lewisville, and it plans to open seven more in Prosper, Plano, Mesquite, Cedar Hill, Irving, Lake Worth and Grand Prairie.
The retailer, which offers many of its products at $5 or less, targets a younger, wealthier and more suburban demographic than Dollar General. The average location is between 7.5K SF and 8.5K SF and includes a wide range of products, such as home décor, beauty items, toys, arts and crafts, and pet supplies.
After booming during the thick of the pandemic, the at-home fitness trend has died down, leading to the resurgence of gyms. One newcomer to the DFW market is EoS Fitness, which plans to bring five of its 42K SF gyms to the Metroplex over the next few months.
“EoS Fitness is putting down roots in Texas and we’re bringing with us our energy and excitement for accessible and affordable fitness,” CEO Rich Drengberg said in a statement.
The first location will debut in Euless by the end of this year, followed by DeSoto and Fort Worth in 2023. The company also plans to open gyms in Plano and North Richland Hills, according to a company spokesperson.
In addition to traditional amenities, EoS offers a separate workout space where movies are played on a big screen, a green-turf functional training area, a massage area and a Kids’ Club.
The company’s commitment to DFW doesn’t end at new gyms — it is also moving its headquarters from Phoenix to Dallas. EoS estimates the move will bring thousands of new wellness-focused jobs to Texas over the next 10 years, per the release.
By: Olivia Lueckemeyer