SRS Real Estate Partners has appointed Ryan Byrne as the leader of retail investments for its south central region, covering Texas, Arkansas, Oklahoma, and Louisiana. Byrne brings a decade of experience from his previous role as partner at Byrne Company.
Despite predictions about the decline of retail over the past twenty years, the sector has shown resilience, especially after challenges posed by the pandemic. The Dallas-Fort Worth retail market remains stable with a 4.8 percent vacancy rate at the end of the second quarter, unchanged from a year earlier. Average asking rents have increased from $19.78 to $20.28 per square foot during that period.
Byrne discussed his new position and perspectives on retail’s future in an interview with The Real Deal. When asked about his focus in terms of price range and client type, he said: “It’s going to be a mix of private, institutional, family office type groups. Five-tenant and above, and roughly $10 million in value.”
He addressed trends in property types favored by clients: “Grocery-anchored is a really attractive space, but we do power centers. We do some of these lifestyle centers, where it could be a $30 million deal, but we’re in a $250,000 average income market with high home values. Some of those deals might not have a main anchor, but it’s going to be high-end shops and high-end restaurants.”
Reflecting on recent performance within retail real estate, Byrne stated: “We’ve been lucky in the retail space. We had Covid, which caused some problems with some of these shopping centers. We had the Amazon effect that came in. We even had higher interest rates. Retailers weathered the storm on every single one of these.”
He added: “People have realized that retail is not going anywhere. Americans, just by habit, we like to go and shop. We like to go to restaurants. We like to walk in a store. We like to be social and be around people.”
On investment strategies and holding periods for assets, Byrne noted: “It really can be all of the above… There are some groups that are going to be short-term value-add buyers that are going to buy and try and push rents, redevelop it, backfill some vacant space and then go sell it pretty quickly… And there’ll be other groups that are saying, ‘Hey, I’m just a long term holder. I’m a high net worth group. I’m gonna go hold it, I just want cashflow longterm.’”
Regarding how owners are managing large vacant spaces left by retailers such as Party City or Tuesday Morning closing stores—a trend seen across Texas—Byrne observed: “People used to get scared of the big box space, but everyone’s realizing they’re getting backfilled quickly… It can be reinvented… But there’s always new tenants especially in Texas which is one of the strongest markets.”
Asked about who is filling these spaces now—such as experiential tenants or fitness companies—he said: “It all depends on the location, on the type of center, on the market, on the incomes… every center has a life of its own.”
On creative approaches owners use for properties with strong daily traffic flows from restaurants or entertainment venues he commented: “Everyone kind of has their model… but properties that have a lot of daily traffic with restaurants and a little more life to it… tend to do pretty well… So it brings life at night and at day.”
Recent reports indicate that while some retailers close locations across Texas—including national chains—other businesses such as gyms or seasonal stores like Spirit Halloween have moved into vacated big-box spaces (https://therealdeal.com/texas/2023/08/18/spirit-halloween-finds-silver-lining-of-big-box-retail-flops-in-houston/).
Dallas-based Dillard’s recently acquired a mall property for $34 million amid shifting trends in brick-and-mortar retail (https://therealdeal.com/texas/2023/09/07/dillards-bucks-retail-trend-with-34m-mall-purchase/).
As shifts continue within commercial real estate across Texas cities such as Houston and Dallas-Fort Worth (https://therealdeal.com/texas/houston/tag/commercial-real-estate/) , industry leaders point out opportunities for adaptation remain strong.
