Finally, Grocers Aren't the Only Anchor Options
Grocers haven’t stopped their mind-boggling race for new stores yet, but they might get some new competition for anchor space: Developers are turning more often to entertainment anchors to boost traffic. We’re excited to delve into it at our 5th Annual Bisnow Houston Retail Estate Summit on Oct. 8, starting at 7:30am at the Houstonian.
Evergreen Realty president Lilly Golden (our panelist was snapped this morning, far right with colleagues Joey Lumsden and Blaire Moreland) says having Main Event anchor Katy Ranch’s first phase was so successful that her team is leasing 70k SF in Phase 2 to fitness and entertainment users. The new tenants’ response has been so positive that she expects to start construction on Phase 3 next year, with stores opening in early 2017. Retailers are also finding new ways to increase traffic within their stores. Lilly’s client Guitar Center is adding recording studios and music lesson rooms to each location, and her client Sun & Ski Sports is sponsoring bike races and hosting registration inside the store.
With the ever-increasing demand for restaurant, medical and service-related users, Lilly says the small strip retail centers she represents could be renamed “convenience centers,” as she’s seeing fewer and fewer true retailers locate there. It’s not necessarily a negative trend, Lilly tells us, as convenience-oriented tenants can pay higher rents, which helps developers justify land costs. They also satisfy the growing demand from consumers to get fast food, fast service and emergency medical care…which are in greater demand since we’re moving a little slower in this ever-worsening Houston traffic.
But grocers are still incredibly active; NewQuest has a half dozen new Kroger projects delivering in 2016 and 2017, partner Dean Lane (another panelist) tells us. The company has been working on them for a while; it takes years to get a Kroger deal to groundbreaking, but he says it just happens that so many are starting around the same time. The latest to begin construction is Stableside at Falcon Landing in Katy at Gaston Road and Falcon Landing. The 170k SF center is across from a new high school and will include five to seven pads, 25k SF of restaurants, and green space, and a theater has been proposed there. Dean says the project is a bit of a hybrid/specialty center. It’ll open in 2017.
Katy’s also getting a new Kroger in Grand Morton Town Center, rendered here. The property is at the northeast and southeast corners of the Grand Parkway and Morton Road. Walmart will join Kroger at the intersection. NewQuest also just started a 200k SF Kroger Marketplace-anchored center spanning both sides of League City Parkway at Hobbes Road. Dean predicts Kroger will continue at this pace for a little while because there’s so much competition, and it’s in defensive mode trying to keep the top spot in Houston’s market share. But they do chase housing growth, and Dean says there’s no question it’s slowing down a bit.
Read King has been building up its retail pipeline for the last several years, and now it’s hitting the dirt with 1.8M SF of projects in development or pre-development. SVP Ryan Orr (another speaker, he's pictured with his wife at Pebble Beach this summer) tells us one of the most exciting is the Waterview Town Center mixed-use development. Read King bought 110 acres at the Grand Parkway and Harlem a couple of years ago, and has been waiting for growth to continue down the Grand Parkway. Now that Johnson Development has announced its Harvest Green community (and nearby Aliana is in the top 20 communities nationwide for home sales), it’s ready to start building out 70 acres of retail, 15 acres of single-family, 15 acres of multifamily, and a couple of acres of office and service users.
An apartment community is already underway there, and the first phase of retail will break ground in the first half of next year. (Ryan’s working on a major anchor deal now.) Single-family and office will follow when the market demands, Ryan tells us. Read King is also starting Phase 2 of Vintage Marketplace (laid out here) next year, adding a restaurant village with four or five new concepts. And Walmart is keeping it busy with numerous projects, including locations that’ll deliver next year in Read King’s 50 acres surrounding Fry and West roads and at Barker Cypress and Cypress North Houston. Meanwhile, Ryan tells us the firm’s not slowing down its medical development, which has been its heavy focus over the last few years—it’s got $250M worth of projects in the pipeline.