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AUSTIN — You may have heard that storefront retail is dead, with thousands of shops going dark.
"I hope it’s not that bad — we are building 18 new shopping centers now in Texas cities," said Herbert Weitzman, chairman of the statewide retail real estate firm that bears his name.
To be in the real estate business for 50 years, you have to be a positive guy.
But Weitzman is putting his money where his optimism is by developing new retail projects across Texas.
Weitzman isn’t kidding himself that a lot of shopping venues and stores are circling the drain. But there are enough new retail concepts and moneymaking merchants out there that he’s adding to the company’s property portfolio in Texas, which already totals about 40 million square feet.
Weitzman’s Dallas-based firm is remodeling retail strips, adding on to existing centers and doing new projects from the ground up in all of Texas’ major markets.
"We are building right now in Austin, San Antonio, Dallas and Houston," Weitzman said this week at a meeting of the National Association of Real Estate Editors in Austin.
Two of his shopping center developments in Houston and San Antonio total about 1 million square feet each.
Herbert Weitzman has been leasing and building Texas retail real estate for five decades.
"They are the two biggest projects we have ever done," Weitzman said.
Many of the retail centers that are catching the most consumer dollars today are smaller corner store developments.
"The neighborhood centers, which are 10,000 to 15,000 square feet, are probably the safest investment that anybody can build," Weitzman said. "The open-air centers are the ones you go to every day for service and food and medical and your groceries.
"It’s near your house and it’s convenient, and it’s not going away."
Weitzman said restaurants and medical tenants are some of the biggest draws for his firm’s shopping centers.
"We’ve focused on uses which are not able to be bought online," he said.
At the other end of the spectrum, many of the big regional enclosed malls are hurting and will likely go under.
"We are at the tail end of any growth at all in malls," Weitzman said. "There might be 45 percent of malls that used to be operating that have been closed up, converted or are headed to the mall graveyard."
Weitzman doesn’t blame all of the retail industry’s woes on the internet.
He sees a merger of the digital and storefront businesses.
"The retail companies are slowing down," Weitzman said. "They are trying to retrofit their operations and merge digital into their brick and mortar.
"On the other hand, the online stores and Amazon are integrating their online business into brick and mortar."
Big retail brand buyouts that saddled merchants with billions in debt have also been a factor in some stores’ declines, he said.
"The venture capital firms have purchased a lot of these retail companies and leveraged them up [with debt] and got their money out," Weitzman said. "If there is some contraction in retail — which is going on today — you have a hiccup.
"If you have any movement in the income stream, the debt doesn’t change — you have to continue to pay."
After surviving multiple real estate cycles in the five decades he’s been in the shopping center business, Weitzman isn’t fretting about the end of the current Texas real estate boom.
"The biggest cause of a real estate slowdown is overbuilding," he said. "We are not seeing it."
But, he admits, this real estate phase has lasted longer than almost any.
"We are way down the road."