The retail market expansion continues in the Dallas/Fort Worth Metroplex, thanks to the economic vitality of the area. The hot market has produced skyrocketing property values and huge increases in tax assessments.
At mid-year, only 8.4% of North Texas stores were empty and retail vacancy dropped to the lowest level in more than three decades, according to the Weitzman Group. It's a big improvement from 2009 when about 14% of the local shopping center market was empty.
Big Box Shakeup
With the announcement of nine Sports Authority store closures in DFW last quarter and the exit of The Fresh Market, there was an uptick in supply of big box space. However, the stores will likely be absorbed quickly since they are in preferred locations within Class A and B properties.
Most of the large-space retail market activity is driven by grocery, fitness, and entertainment stores. In fact, CBRE identified approximately 70 grocery-anchored developments either in the pipeline or under construction within DFW, with more announced almost weekly.
This is fueling demand for new development that should continue through 2017. Some of the most active large retailers include Gander Mountain, WinCo, H-E-B, Youfit, Total Wine, Sprouts, Trader Joe's, Whole Foods, and Fitness Connection.
Keeping Taxes Equitable
The most effective method for minimizing tax increases in a skyrocketing market is a fair and equitable comparison of the assessed values of competitive properties. This is especially true with a property that has recently been purchased at a price higher than the value on the tax roll.
Often times, tax appraisers will concentrate their valuation efforts on properties that have recently transferred, and fail to increase most other properties of a given type in a particular submarket. The lower values of these properties can be appropriately adjusted and compared to the sale property to yield substantial reductions in assessed value.