RPAI’s Jason Kasal talks Texas
Jason Kasal is a third-generation Texan and, as such, is a local resource for what is on trend when it comes to the Lone Star State. Yet the mad pace of new development projects in places like Houston and Dallas’s northern suburbs is fueled by a steady flow of thousands of out-of-staters following jobs to these vibrant Texas boomtowns. For an up-close look at the retail scene there, we turned to Kasal, a vice president and senior leasing director for RPAI who oversees 37 properties in the state.
RPAI has a pretty clearly laid out vision for the retail projects it undertakes, doesn’t it, Jason?
We invest in real estate, so we look for the best real estate. We don’t invest in tenants. We’ve identified 10 markets in the country where we want a presence and we feel we know these places better than any other owner. We have boots on the ground in all of them. The idea is to have people like me in these markets and be aware of everything that’s going on in them.
And you cover…?
Dallas, Houston, San Antonio, and Austin.
Tell us about an RPAI property that’s representative of what’s being demanded of retail in Texas.
Southlake Town Square, northwest of Dallas, is a good example. It’s a super-regional shopping destination that draws two million shoppers a year, located in Southlake, where the average household income tops $280,000 in a one-mile radius. It’s not a shopping experience you could find at any mall. It’s 1.2 million square feet, but doesn’t have any anchors. The average shop size is 2,500 square feet. Retailers include brands like Apple, Peloton, Lululemon, Madewell, Sephora and Tesla.
What kind of demographics drive the evolution of north Texas?
Many local residents are not a native Texans. In Plano, a lot of corporations like Toyota and Liberty Mutual have relocated here, and so you’ve got daytime populations of 60,000 people in a very concentrated area, and we’re the retail component at heart of it all. In Southlake, we’re close to DFW airport, and so we have a steady flow of new traffic from business travelers. We did a credit card study and found that a significant number of our shoppers did not reside in Texas.
Aside from upscale retail, did you add more food and beverage and entertainment tenants?
Yes, but not always. If we look our project in Plano, The Shops at Legacy is a 392,000-square-foot mixed-use asset that was just the opposite. It overly relied on F&B and entertainment and was light on retail in the beginning. At the top of our list when we bought the center in 2009 was Urban Outfitters. Once we added them, we were able to attract other retailers like Kendra Scott, Bluemercury, Benefit Cosmetics and Travis Matthew.
Are retail chains, by and large, savvy about what’s going on in Texas?
Retailers are very sophisticated in their approach to Texas. Nearly all of the brands work with local brokers. If a retailer is saying that their open-to-buy is 10, they want to hit 10 home runs. This is especially true if they are new to the market and they are looking to local agents to help. Many brokers are very good at helping with a strategy that ranks center opening. Then there are the digitally native brands that know exactly where their customers are. For Soft Surroundings, Southlake was one of their best-performing Zip Codes for online and catalog sales before we engaged in a local store.
Do you think your town centers will continue to appeal to millennials and Generation Z shoppers as they become a larger part of the shopper base?
Very much so, because the social interaction component is a big factor for them. At Southlake, we host several festivals including a street art show that draws 70,000 people over three days, and we see a lot of people return and spend money with us over the next 30 days. We’re seeing millennials and Gen Z especially, make purchasing decisions online before they get to the shopping center and the expectation is to take the product with them once they enter the store. If they really want something, even waiting two days for an online delivery is too long. We make sure we are providing an engaging space to shop with the most relevant brands offering instant fulfillment around a social component that can’t be duplicated elsewhere.
RPAI has a pretty clearly laid out vision for the retail projects it undertakes, doesn’t it, Jason?
We invest in real estate, so we look for the best real estate. We don’t invest in tenants. We’ve identified 10 markets in the country where we want a presence and we feel we know these places better than any other owner. We have boots on the ground in all of them. The idea is to have people like me in these markets and be aware of everything that’s going on in them.
And you cover…?
Dallas, Houston, San Antonio, and Austin.
Tell us about an RPAI property that’s representative of what’s being demanded of retail in Texas.
Southlake Town Square, northwest of Dallas, is a good example. It’s a super-regional shopping destination that draws two million shoppers a year, located in Southlake, where the average household income tops $280,000 in a one-mile radius. It’s not a shopping experience you could find at any mall. It’s 1.2 million square feet, but doesn’t have any anchors. The average shop size is 2,500 square feet. Retailers include brands like Apple, Peloton, Lululemon, Madewell, Sephora and Tesla.
What kind of demographics drive the evolution of north Texas?
Many local residents are not a native Texans. In Plano, a lot of corporations like Toyota and Liberty Mutual have relocated here, and so you’ve got daytime populations of 60,000 people in a very concentrated area, and we’re the retail component at heart of it all. In Southlake, we’re close to DFW airport, and so we have a steady flow of new traffic from business travelers. We did a credit card study and found that a significant number of our shoppers did not reside in Texas.
Aside from upscale retail, did you add more food and beverage and entertainment tenants?
Yes, but not always. If we look our project in Plano, The Shops at Legacy is a 392,000-square-foot mixed-use asset that was just the opposite. It overly relied on F&B and entertainment and was light on retail in the beginning. At the top of our list when we bought the center in 2009 was Urban Outfitters. Once we added them, we were able to attract other retailers like Kendra Scott, Bluemercury, Benefit Cosmetics and Travis Matthew.
Are retail chains, by and large, savvy about what’s going on in Texas?
Retailers are very sophisticated in their approach to Texas. Nearly all of the brands work with local brokers. If a retailer is saying that their open-to-buy is 10, they want to hit 10 home runs. This is especially true if they are new to the market and they are looking to local agents to help. Many brokers are very good at helping with a strategy that ranks center opening. Then there are the digitally native brands that know exactly where their customers are. For Soft Surroundings, Southlake was one of their best-performing Zip Codes for online and catalog sales before we engaged in a local store.
Do you think your town centers will continue to appeal to millennials and Generation Z shoppers as they become a larger part of the shopper base?
Very much so, because the social interaction component is a big factor for them. At Southlake, we host several festivals including a street art show that draws 70,000 people over three days, and we see a lot of people return and spend money with us over the next 30 days. We’re seeing millennials and Gen Z especially, make purchasing decisions online before they get to the shopping center and the expectation is to take the product with them once they enter the store. If they really want something, even waiting two days for an online delivery is too long. We make sure we are providing an engaging space to shop with the most relevant brands offering instant fulfillment around a social component that can’t be duplicated elsewhere.