With bricks-and-mortar retail businesses under pressure, Grandscape — a huge, Berkshire Hathaway-backed development under construction in the Dallas area — is coming online at a precarious time.
But Grandscape, which will feature apartments, retail and entertainment, is bound to be a success even in these challenged retail waters. Just take it from the second-richest man in the world.
That would, of course, be Warren Buffett, chairman and chief executive of Berkshire Hathaway, which also is the financial backer of the $1.5 billion, 430-acre project in The Colony, Texas, anchored by a Nebraska Furniture Mart store that opened in 2015.
Now under way is a new 90-acre lifestyle center. Grandscape also will include a boardwalk-inspired restaurant and entertainment district, apartments and offices.
The construction comes as the retail industry has been in a flux for the past few years, as bricks-and-mortar stores try to find their place in a world where more and more shoppers are buying clothes, technology, housewares and even food online.
Still, Buffett is bullish.
“Any retailer that gets the chance to join with us in this project is going to be looking at some very attractive figures a few years from now,” Buffett promises in a short video on Grandscape’s website in which he is selling the development to potential tenants.
So far, 2017 has been especially brutal to retailers, with several bankruptcies already filed, including locally based Gordmans, Payless Shoesource, Bebe, outdoors retailer Gander Mountain, Deb, Limited and Wet Seal. Several others, like Sears, are closing hundreds of stores.
The Berkshire project is a subsidiary of Nebraska Furniture Mart and, instead of partnering with a developer or real estate brokers, Nebraska Furniture Mart is handling development from the ground up, said Jeff Lind, president of Grandscape.
So far, the development has secured one other retailer: sporting goods and outdoors seller Scheels has plans for a 300,000-square-foot store — the chain’s biggest. It’s expected to open in 2020. Galaxy Theatres, a luxury movie theater, is expected to open in 2019. Seven restaurants and a Hampton Inn are open at the project, with a handful more restaurants expected in the coming years.
As a restaurant and entertainment hub, the Grandscape project should be a success, said Jeff Green, the president and chief executive of Phoenix-based Jeff Green Partners, a site-selection consulting firm that works with retailers, property owners and developers.
When it comes to retail? “It remains to be seen whether they will ever get more traditional shopping center type retailers there,” he said.
Lind, Grandscape’s president, said the project already has turned down “well over 100” potential retail tenants who want to be in the project because they don’t fit into the long-term vision. The goal is to bring in retailers that can’t be found anywhere else in the Dallas area to create a truly unique experience, Lind said.
“We’re working on a number of deals now that will be first in the state of Texas, some that will be first in the U.S.,” Lind said.
Six or seven years ago, plans called for a department store, but that plan has evolved as department stores continue to struggle.
“It’s definitely a moving target,” Lind said. Some delay has been out of prudence: Officials with Grandscape are watching and waiting to see how the chips will fall, keeping an eye on retailers that want to join the project for a year or two before committing to them as tenants.
In that way, those working on Grandscape consider themselves the “anti-developer,” with owners of the center talking directly with retail companies rather than leasing the space via a broker or third-party developer.
“We have very patient capital,” Lind said. “Mr Buffett has made it clear to make good long-term decisions, not short-term decisions. It’s not a lease-the-space-as-fast-as-you-can, get-deals-done-so-we-can-get-the-bank-hurdles-cleared” kind of project.
Buffett in the short video says Berkshire brings “unlimited financial resources” to the project.
That, and the center’s location — in one of the fastest-growing metropolitan areas in the country — should help Grandscape succeed, even with so many retailers shrinking or disappearing altogether, Green said.
The site also is close to several large office buildings, including Toyota’s North American headquarters. Income demographics are “off the charts” in The Colony, Texas, the town where the center is being built. Households are largely made up of high-income families, Green said.
The area “probably can support more retail than any other place in the country,” he said. “North Dallas is that unique.”
The market in Texas is, as they say, bigger. The Nebraska Furniture Mart store at the site is selling more than any other of the company’s stores in Omaha and Kansas City, store manager Ed Lipsett said. It’s also selling more home theater, patio and high-end, high-ticket designer furniture than other stores, he said.
And Berkshire shareholders will feel right at home in the Texas store: Shareholders can get the same deals this weekend that they would in Omaha.
The Omaha World-Herald is owned by Berkshire Hathaway Inc.
Correction: The size of the planned Scheels store was listed incorrectly in a previous version of this story.