Texas Real Estate Business
Cover Story October 2009
Compiled by Lindsey W. Marcec
Retail real estate professionals from across the state discuss the industry’s performance this year and what they foresee for 2010 and 2011. Full Article
West Texas and the Rio Grande Valley
From Amarillo, El Paso, Lubbock and McAllen, respectively, the following professionals participated in the roundtable discussion: J. Gaut, president, J. Gaut & Associates; Bob Ayoub, president of MIMCO, Inc.; Wesley Hallmark, senior investment advisor for Sperry Van Ness
Hallmark & Assoc., Inc.; and Michael Blum, partner and managing broker with NAI Rio Grande Valley.
TREB: What is the current state of retail activity in your market?
Blum: New leasing has slowed considerably in the Rio Grande Valley since the economic downturn. Access to capital for tenant finish-out has created a huge impediment to entry. Landlords with pre-existing facilities did not have funds in their budgets to cover unanticipated TI costs not covered by lenders.
TREB: What leasing or development trends have surfaced during the downturn?
Blum: Overall, the trend is not much leasing. It seems the most interest in retail leasing is in the food business. Both locals and chains are still looking for quality sites. This has been a very strong market for restaurants and we expect this trend to continue.
TREB: Have any major developments come on line this year?
Blum: No new projects have surfaced and not much is planned for the balance of 2009. Most major developments are in a holding pattern.
TREB: Which types of retail product are doing the best?
Blum: Neighborhood is doing best.
TREB: Have any major retailers entered or exited your market?
Blum: The third Best Buy opened this year at Palms Crossing. Ashley Furniture opened its first Valley store this year, and Rooms To Go and Pappadeaux Seafood Kitchen are both under construction with their first Valley stores. Buffalo Wild Wings is under construction with its second McAllen store. Several CVS/pharmacy stores have opened this year. Mervyns, Circuit City, Linens ‘n Things have closed their doors. Other retail is very slow.
TREB: What is vacancy like? Are rental rates holding steady?
Blum: We don’t have a current update; however, we are seeing more vacancy in well-leased strip centers and slow to no growth in existing centers with shell space. Rental rates range from $12 to $21, depending on the location.
TREB: How is the second half of the year performing compared to the first half?
Blum: For the Rio Grande Valley, the second half has been worse.
TREB: Do you believe things will turn around in your market in 2010?
Blum: Unless the financial markets ease up, tenants are going to struggle trying to find dollars for their improvements. Landlords are going to have a tough time leasing space unless they have funds to finance TIs.
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