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Retail Rundown with Hillwood

  6/12/2024 4:00:13 PM

Retail Rundown with Hillwood

Retail is still on the uptick in 2024, and the new director of retail at Hillwood, noted experiential retail is a key to driving its growth.

“Overall, the retail segment has outperformed expectations, and I think that will continue throughout the rest of 2024,” said Batey, who leads the leasing, development and marketing efforts of the retail portfolio at AllianceTexas. “People want memorable and engaging customer experiences, and play and eat concepts are growing rapidly.”

Batey talked trends and the future of retail in a recent Q&A. Here are the highlights:

1. What should we expect from the retail sector for the rest of the year?

“We’re seeing great consumer activity, and retailers are bullish on the market. And, while leasing is extremely active, high-interest rates are driving hesitancy around loans for commercial real estate projects. This combination creates a tight market for Class A retail as the market experiences exceptionally low vacancy rates. With interest rate hikes expected to stall, I’m optimistic for continued outperformance.”

2. How is consumer behavior affecting what you’re seeing in the market?

“The pandemic changed consumer behavior forever. For instance, most restaurants now offer some form of either a drive-through window or drive-up space, and year over year e-commerce has continued to grow. There’s also a strategy gaining popularity where smaller brick-and-mortar storefronts with limited stock may bridge the gap between e-commerce and physical storefronts. For example, Vuori, known for its online presence, has a storefront at Dallas’ NorthPark, where it offers each item sold online but with limited color options. Customers can try on a product in the store and then order their desired color online. Consumers can also expect retailers to tighten their return policies. Online order returns have increased substantially because of lax policies, and creating stricter guidelines may slow this trend.”

3. Can you provide an update on the Front 44 project at Circle T Ranch?

“We’re currently designing Phase I of our mixed-use project, Front 44, anchored by the Charles Schwab campus in Westlake. The development will have three multitenant buildings with planned restaurant and fitness concepts, a daycare and a hotel. We’re excited to see Charles Schwab employees and the local community utilize these specialized amenities.”

4. How is return-to-work changing the retail sector?

“The retail sector is affected every time a significant shift in the market occurs, and that’s exactly what the work-from-home mandate created — extreme uncertainty. We knew employees would eventually return to the office in some capacity, but no one could predict when. Work-from-home was a major disruption for the daytime population, a significant metric used in the retail sector. Retailers have now redefined their site criteria and reworked their internal models. Hillwood’s Front 44 at Circle T Ranch is a good example of this, as employees now require amenities like retail as part of their ‘in-office experience.’ As North Texas continues to attract more corporate HQs and relocations, the potential for more employees increases, bringing the rise in daytime population, a catalyst for retail growth.”

5. HEB recently announced it will open on April 10th at Alliance Town Center. Are there any other retail openings to look forward to in 2024?

“I hope you’re hungry! Hash Kitchen (brunch) and Sicilian Butcher (Italian) are two popular restaurants expected to open in just a few weeks at Parkside at Alliance Town Center, near the new HEB. Mo’Bettahs, a fast-casual concept offering Hawaiian-style food with Asian and Filipino influences, is also coming soon.”

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