Experiential Retail Remains In High Demand 3 Years After Onset Of Pandemic

 

By Olivia Lueckemeyer, Bisnow

So-called retailtainment concepts continue to flood the Metroplex as companies seek to meet the ever-growing demand for unique experiences.

Experiential retail predates the pandemic, but months of lockdown and precautions exacerbated the desire for activities outside the home. Competitive socializing concepts — businesses like Topgolf and Chicken N Pickle — increased by 386% between 2021 and 2023, according to a nationwide report by Cushman & Wakefield.

Strong population growth and a laissez-faire business environment tend to put DFW at the top of the list for many retailtainment operators, Lagniappe Capital Partners co-founder and Managing Director Zach Shor said during Bisnow’s Dallas-Fort Worth Experiential Retail and Mixed-Use event Wednesday at the Hilton Anatole.

“DFW is a magical place when you think about the cost of living compared to wages, and there’s not a whole lot else to do,” he said. “There’s no mountains, no ocean, so you’ve got a really special environment in DFW for these projects.”

Over the years, the Metroplex has seen entire developments built around experiential retail. Grandscape, a more than 400-acre retailtainment destination in The Colony, opened in 2021 and boasts a lineup of tenants that draws thousands of visitors from North Texas and beyond.

Among Grandscape’s offerings are Sixes Social Cricket, Andretti Indoor Karting & Games, Fireside Surf and Popstroke. Next year, the development will welcome Cosm, an immersive technology and entertainment retailer known for its light and sound displays.

“[Grandscape] has done an incredible job of curating the tenants there, and it’s heavily skewed toward experience,” Cosm Senior Vice President of Venues and Experience Tyler Washburn said. “There’s multiple destinations, and they all complement each other, which drives the stay time.”

Also set to debut next year is Goodsurf, a stationary wave concept accompanied by a bar, restaurant and beer garden. The flagship location is under construction in Deep Ellum, and Shor, who is also the company’s CEO, said another four to five outposts are expected to open over the next several years.

Perhaps counterintuitively, demand for Goodsurf, Cosm and other retailtainment concepts should be buoyed by the slowdown in consumer spending that comes with economic turmoil, he said.

“People still need to escape,” Shor said. “You might be at Cosm instead of paying $250 for a football ticket. You might be going to Goodsurf instead of flying to San Diego.”

Younger millennials and members of Generation Z are more likely to be consumers of retailtainment, said Stephany Ruiz, vice president of experience at Trademark Property Co. These groups are having children later in life, opening up more disposable income to spend on experiences.

According to a Harris Poll survey, more than 75% of millennials chose experiences over things before the pandemic, and that desire has only grown. Consumer spending on entertainment in the U.S. saw a 23% increase in 2021, more than 15% above pre-coronavirus levels.

“Being on lockdown for two years gave us all cabin fever, and we all really wanted to go out,” Ruiz said. “While millennials and Gen Z are driving a lot of these initiatives for us, boomers and every range are looking to experience things and be around other people.”

Despite DFW’s unique advantages, bringing a new concept into the market isn’t without its challenges. A dearth of new construction, along with rising costs, lengthy construction timelines and permitting delays, all contribute to slowing retailtainment’s momentum.

“There is never enough new construction, and demand right now is far outstripping supply,” Shor said. “You hear about new projects and new concepts all the time, especially in DFW.”

Retail construction was once again at record-low levels at the midpoint of the year, with Weitzman predicting just 641K SF being added in the entirety of 2023. That is up from 539K SF in 2022 but still a far cry from the 4M SF added in 2017.

The market is also highly saturated. There were 219 venues in Dallas-Fort Worth as of mid-July, more than any other metro area in Texas, according to JLL.

Still, Shor said there is more than enough demand to sustain the influx of tenants.

“There’s a lot of different concepts, and it’s hard to keep track sometimes,” he said. “But there’s so much demand for unique out-of-home experiences … and I think that demand will always be there.”

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https://www.bisnow.com/dallas-ft-worth/news/retail/experiential-retail-remains-in-high-demand-three-years-after-onset-of-pandemic-121243