Franchise groups trying to keep expansion plans on track are bumping into challenges that include a competitive real estate market with more limited options and rising costs.
High quality retail and restaurant space is continuing to disappear, with shopping center construction starts that are at their lowest level since 2005.
“There’s definitely a shortage of supply, especially for newer retail in the A and B markets,” said Ryan Johnson, managing principal and market leader for Dallas-Fort Worth at SRS Real Estate Partners. New development has been very low, largely due to higher construction costs, rising interest rates and lenders that have pulled back on construction lending. The net result is increased competition for those brands that are continuing to expand, especially in high growth markets across the Sun Belt.
The toughest space to find is what everyone wants, which are endcaps and freestanding spaces that can accommodate drive-thrus. “Drive-thru endcaps have been hot for two-plus years. That really started with COVID and people who wanted to be able to pick up something quick in their car. That’s also what’s most in demand for any future developments that are in the works,” said Johnson.
For the full story, click here.