SRS Real Estate Partners is riding the profitable wave of retail real estate with the hire of Ryan Byrne.
Byrne, who previously spent 10 years as a partner at Byrne Company, is joining the Dallas-based firm as its leader of retail investments for the south central region, which includes Texas, Arkansas, Oklahoma and Louisiana.
The death knell of retail has been foretold plenty of times in the last two decades, but the asset class has emerged stronger after its last existential threat, the pandemic. It’s even weathering the closure of big box stores like Forever 21 and Party City with relative ease.
The retail market in Dallas-Fort Worth is healthy, with a vacancy rate of 4.8 percent at the end of the second quarter, unchanged from a year before, according to Partners Real Estate. Average asking rents are up from last year, too, rising from $19.78 per square foot to $20.28.
The Real Deal chatted with Byrne about his new role and why retail “is not going anywhere.”
What’s in your wheelhouse in terms of price range?
It’s going to be a mix of private, institutional, family office type groups. Five-tenant and above, and roughly $10 million in value.
Grocery-anchored retail is all the rage. Is that the ideal property for your clients?
Not necessarily. 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.
How have these types of assets been performing lately?
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.
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.
How long are investors typically looking to hold these kinds of assets?
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. There’s a developer side that’s going to buy the land, go lease up the whole center and sell it off. And then you’ve got a mix of other buyers that will do a five-to-seven year hold, depending on hitting return. 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.”
With the closure of big-box stores like Party City and Tuesday Morning, what are you seeing owners do with these big vacant spaces?
People used to get scared of the big box space, but everyone’s realizing they’re getting backfilled quickly. Every time something happens, there always tends to be another tenant coming in, and there always tends to be almost a higher and better use that gives opportunity and value to the center. It can be reinvented. You can get a new tenant that changes the model. But there’s always new tenants, especially in Texas, which is one of the strongest markets. Every tenant in the country wants to be here
Who’s doing that these days? Experiential tenants? Fitness companies?
It all depends on the location, on the type of center, on the market, on the incomes. That’s what’s so great and unique about retail: every center has a life of its own.
How are owners getting creative with these properties?
Everyone kind of has their model of what they’re looking for, but the properties that have a lot of daily traffic with restaurants and a little more life to it, those centers, tend to do pretty well, because you can obviously order food online, but if you want to go see your friends, you’re going to go to dinner, and you’re going to get out. So it brings life at night and at day. And it’s good to have a center that has not only good daytime traffic, but also brings in a crowd at night.
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