City officials and community leaders in Frisco expect a wave of new retail possibilities to follow the recent housing explosion in the area.

Residential and retail development runs in cycles, and with housing developments taking shape at a rapid pace for the past couple of years, retail is poised to take another step forward, said John Lettellier, director of the city's Development Services.

"Generally you see about 2 and a half years of residential growth—strong residential growth—and then the retail starts to come," Lettellier said. "[Retail growth] is going to be taking off soon, maybe by the end of this year, early next year."

Lettellier said while the city issued about 1,600 single-family home permits in 2012, this year permits are on track to reach about 2,300 to 2,400.

Retail follows rooftops

Jim Gandy, Frisco Economic Development Corp. president, said most real estate development works in cycles, and those growth cycles may not be as strong from one to the next.

"We are seeing certainly a tremendous increase in housing development in Frisco, and that's going to be very attractive to retailers looking for emerging markets where there is significant retail development," Gandy said.

Housing developments are "extremely critical" in attracting retailers—both what is already built and plans for future development.

"Real estate developers looking to do commercial development from a retail perspective generally say that retail follows rooftops," Gandy said. "So as you have more rooftops, you obviously have more people, and there is a stronger market for retailers in a retail trade area."

Retailers do drive time studies to determine the demographics within a specified distance, whether it is five, 10 or 15 minutes from the proposed development.

The FEDC uses similar studies to recruit developers and retailers, Gandy said.

The FEDC focuses its efforts on attracting developers and big-box retailers, such as Target, Wal-Mart, Lowe's Home Improvement and mall anchor stores.

Gandy said generally, when a big-box retailer is established, smaller retail stores and restaurants will follow and benefit from the traffic drawn by the larger business.

Housing trends

The eagerness builders have for finished lots is the strongest Frisco has seen since 2005 or 2006, and retail development is closely tied to that residential growth, said Matthew Kiran with Rex Real Estate, based in Frisco.

"The old adage of retail follows rooftops will dictate what gets built," Kiran said. "The longer and stronger the residential run, the higher the probability that we will see several significant retail or mixed-use projects develop."

Provided interest rates remain at or near the levels of the past several years, Kiran said he expects home sales to remain strong and wouldn't be surprised if Frisco maintained its level of residential growth for about the next five years.

"Preston Road, the Dallas North Tollway and the 380 corridor sites are being closely monitored by both retail developers and retailers," Kiran said. "We would venture to say that we will first see restaurants, entertainment uses and possibly a couple large format big-box retailers in the first wave."

Prices continue to rise

Jeff Cheney, a Frisco City councilman and real estate broker associate with Keller Williams Realty, pointed to Frisco's continued home price increase and continued growth in building permits as measures of Frisco's housing market strength.

"In 2009, we dropped to 921 residential permits, which would be quite a few for most communities," Cheney said. "This year we anticipate approximately 2,500 building permits, with August being our best month in over seven years, with 230 permits issued."

He attributes the growth to an increase in the nationwide housing market because of economic improvements, low interest rates and home prices. Cheney also mentioned the strength of Frisco ISD along with community amenities and a low tax rate.

"I expect pricing to continue to grow in Frisco," the councilman said. "Frisco is generating a great deal of buzz throughout North Texas with exciting projects, such as the Cowboys headquarters and practice facility, great shopping, as well as entertainment options."

He said he expects residential permits to stay at about 2,500 for the next three to five years.

"In addition, we are only about 50 percent developed, so we have ample space to take advantage of the booming economy with exciting new residential and commercial developments," he said.