Highway Widening Could Spur Interest in Colleyville
COLLEYVILLE, TX—Anyone driving through this
town of 22,550 people would believe it to be
little more than a bedroom community in
northeast Tarrant County, 12 miles north of
Dallas-Fort Worth International Airport.
But thanks to the impending widening of
State Highway 26, Colleyville could lose its
sleepy status in the next few years.
According to economic development
director Marty Wieder, the city surveyed its
citizens less than two years ago. “The bottom line was, while the citizens are pleased
with the quality of life in this community,
they’d like to see us do more when it comes
to restaurants and retail,” he explains. The
end result has been a plan encompassing
economic development, marketing and
diversification of revenue sources.
All of that hinges on SH- 26’s widening.
The good news for Colleyville is that, after
years of will-it, won’t-it speculation, funding
has been approved and work is scheduled
to begin in early 2012. The plan is to expand
SH- 26 into a six-lane, divided highway, and
at least one commercial real estate executive is happy about that.
“The main commercial core is Highway
26, and there’s always been uncertainty
from investors, developers and users over
what the future of that highway would be,”
says Jimmy Archie, managing director of
Dallas-based Realty Capital. Archie’s company is developing a variety of projects in
Colleyville, including Meadows Creek Plaza,
which includes approximately 25,000
square feet of office.
Though Colleyville isn’t an area with an
abundance of land, opportunities can be
found in redeveloping existing properties.
In one situation, Realty Capital bought an
old dentist office and sports bar on SH- 26
that Archie describes as “an eyesore,” tore it
down and redeveloped it into a mixed-use
project with 30 condo units and more than
12,000 square feet of retail. This got rid of
the eyesore and gave Realty Capital a project with decent cash flow.
Wieder suggests that, as construction
begins on SH- 26, there will be more redevelopment opportunities along what he
dubbed “the commercial spine of the city.”
With the main road finally set to get bigger,
Wieder is optimistic about where Colleyville
might end up.—Amy Wolff Sorter
Phoenix Retail Market Looks Forward
Phoenix retail big-box vacancy appears to be turning in the right
direction. National and local bankruptcies hit the Phoenix market particularly hard, but several trends are already beginning to
have a positive impact, giving rise to guarded optimism in the
marketplace. With major challenges behind, Phoenix retail is
working its way out of the box.
Following the financial meltdown in 2008,
the national bankruptcies of Circuit City,
Linens ‘N Things and Mervyn’s Department
heavily to Phoenix’s
big-box vacancy. The
bankruptcy filing and restructuring of hometown grocer Basha’s/Food City and the more
recent collapse of Borders Books added to
the supply of available space. This resulted in
a dramatic increase in inventory from seven million square feet
in 2008 to nearly nine million square feet today.
Yet the rate of store closures and bankruptcy filings appears
to be slowing. With virtually no speculative development in the
pipeline, the market’s underlying fundamentals are turning the
corner toward stabilization. New retailers are entering the
region for the first time in several years. WinCo Foods and
Hobby Lobby have acquired former Costco, Wal-Mart and
Mervyn’s locations, many of which have been vacant for years
because of their large footprints and the difficulty and expense
of demolishing and renovating the spaces.
Additionally, numerous retail buildings are being repurposed
for non-retail uses such as universities, charter schools and
medical complexes, to name a few. These non-traditional retail
users have used this downturn to grow their businesses, helping
to reverse vacancy rates.
The relentless downward pressure on rental rates—in most
By Dave Cheatham
cases between 30% and 40%—has allowed national retailers to
grow market share and local retailers to drastically improve the
quality of their real estate locations at rents unachievable before
2009. Phoenix-based Mega Furniture has acquired numerous
sites in high-exposure regional locations. Mega co-owner Saleem
Aly says, “Landlords have become much more aggressive in
finalizing transactions with quality retailers.”
Finally, one of the unique things taking place in several cities
is the demolition of large boxes and re-zoning to accommodate
multifamily residential. The owners of Lake County Village, a
47-acre shopping center near Baseline and Rural Roads in
Tempe, AZ have re-zoned and demolished a majority of the
property for a future apartment community.
For the past few years, the product type of choice for REITs
and institutional investors has shifted to neighborhood grocery-anchored shopping centers. Ironically in Phoenix, this investment class has been the hardest hit. Of the 255 big-box vacancies, 62% are located in these neighborhood shopping centers.
They are concentrated primarily in the retail submarkets of
Phoenix and Mesa.
Looking forward, the most challenging segment will be the
mid-size boxes, from 30,000 to 60,000 square feet, located in
neighborhood centers. These locations will continue to struggle due to the consolidation of the supermarket industry. While
some of these spaces will be absorbed by value retailers, dollar
stores, health clubs and others, the supply of vacant space will
continue to exceed demand and keep leasing rates relatively
low by historical standards.
Dave Cheatham is managing principal of Velocity Retail Group in Phoenix. He
may be contacted at firstname.lastname@example.org. Darren Pitts, EVP and
principal, contributed to this column. He may be contacted at darren.pitts@
velocityretail.com. The views expressed here are the authors’ own.
Vital Signs...Phoenix saw 75% more multifamily sales in Q2 than Q1, with an average 6.4% cap rate.—Colliers International