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6 Opportunities To Watch In Downtown Houston

Want to get a jump-start on upcoming deals? Meet the major Houston players at one of our upcoming events!

After the rollout of initiatives like Plan Downtown, Downtown Houston is emerging as an urbanized reflection of its former self. For a long time, activity in the central business district slowed around 5 p.m. as people left work. Now Downtown is home to many more residents with a lot more to do, eat and see.

Yet, Houston leaders and developers are not satisfied. The densification of Downtown will continue as projects launch to cater to the needs of the growing submarket.

“You want the heartbeat of the city to be where the people are living, working and playing,” Camden Property Trust Senior Vice President Laurie Baker said. “That has been a big push for the city for several years.”

Here is what that push will look like next.

6 Opportunities To Watch In Downtown Houston
Downtown Houston skyline

Grocery Shortage?

The lack of a large-scale, full-service grocer remains a concern, and is one of the most-cited needs for Downtown's future growth. It is only a matter of time before a brand like H-E-B or Whole Foods enters the corridor, Downtown District Executive Director Bob Eury said. Currently, the only grocer is Phoenicia Specialty Foods, which opened Downtown in 2006.

Eury and other Downtown experts will discuss what's next for Downtown Houston at Bisnow's Future of Downtown event Sept. 18.

Marcus & Millichap First Vice President Justin Miller is not totally sold that Downtown residents desire a full grocery store and would be surprised if one opened. More likely options include a smaller, specialty grocer, an urbanized, multiple-story version of a major retailer like the Whole Foods in Midtown or more mobile grocery trucks like Grit Grocer, which park at Market Square every Thursday, he said.

Houstonians are accustomed to driving to a grocery store and are using ride-sharing apps more frequently. Therefore, shopping at a grocery store a few miles away will not deter families from living in Downtown, he believes. The Randalls location at 2225 Louisiana St., south of the central business district, is an option nearby.  

Cheers To Food Halls

Food and beverage retailers are thriving, and are starting to move above-ground.

“There is a much bigger appetite for full-service restaurants on the ground level to open locations in Downtown Houston," Transwestern Managing Director Nick Hernandez said. "As it was pioneering a few years back, it’s no longer. It is a solid restaurant market that stands on its own.”

The next step is food halls and a wider variety of offerings.

The anticipation is overflowing for food halls as Houstonians wait for one of them to open. Four concepts — Bravery Chef Hall, Lyric Market, the Conservatory and Finn Hall — are expected to be game changers as far as restaurant concepts in Downtown.  

"We haven't even been able to enjoy them yet," Eury said. "The new food concepts will allow for more chefs to be involved Downtown."  

The demand for new restaurants is due in part to the densification of Downtown and adjacent submarkets like EaDo, Midtown and the Heights. While at first owners wanted to open steakhouse-type restaurants now the trend is to add a variety of fast-casual and full-service restaurants, including more ethnic cuisine to satisfy customers' more sophisticated pallets, Hernandez said.

Capitol Tower construction
Capitol Tower construction

What To Buy? 

One sector missing is soft goods retailers, places where residents can purchase basic apparel and fashion, home goods and other specialty items, Eury said.  

The challenge of developing more ground-level retail is that many of the buildings were constructed with a large footprint not ideal for smaller stores. It is expensive to reconfigure buildings to accommodate retail. Downtown is also limited by the amount of available space for new development or redevelopment projects, he said.   

Moving forward, it will be important that the city continues to embrace and promote the tunnel system, Eury said. The problem historically was the shorter operational hours due to the dependence on the workday traffic.

“You could always do business during the day, [but] can you do business at night," Hernandez said.

The Hotel Pipeline, Revisited  

Upcoming hotel projects in Houston should include large, in-house meeting and convention rooms to help accommodate more convention and tourism activity, Eury said. 

The hotel offerings in Houston have ramped up after the major investments. In 2000, Downtown had 1,800 rooms in four hotels. Today, there are more than 8,300 rooms in 24 hotels. Future hotel deliveries total more than 500 rooms at three properties.

Even with the diversity of new hotel types from intimate to national brands, the long-term goal is to add two hotels near the George R. Brown Convention Center, Eury said.

Houston First, the city's convention arm, is in talks with a developer to build The W hotel atop the Partnership Tower at 701 Avenida de las Americas. 

Market Square Tower Pool
Infinity pool at Market Square Tower in Downtown Houston

Fill The Gaps

The redevelopment of two parking lots on La Branch Street could enhance the connectivity of the southern portion of downtown to the major entertainment centers, Baker said. 

The lots, which are owned by international companies, could house new retail and restaurant concepts from Bell Street past Discovery Green to Minute Maid Park off Texas Street, she said.

“We ultimately need more retail to move that way and those lots to eventually be developed,” Baker said. “That would tie it all in.”

A New Day, More Residents

As apartments remain in high demand, Eury also expects increased investment and interest in for-sale condominiums like The Marlowe, a 95-unit luxury tower at 1311 Polk. Previously, for-sale options were not as available.

For-rent residential is still increasing. Among the new projects, Camden Property Trust is developing the 21-story Camden Downtown, an apartment complex adjacent to the Toyota Center.

The number of Downtown residents is rising monthly. In May, more than 8,000 residents called the area home, a jump from 3,800 in 2013. 

"You can feel the difference," Eury said. "[Residential development] has had a dramatic transformation on Downtown in terms of bringing more people to live here seven days a week, who give [the area] vitality at night and on the weekends, which is something Downtown always needed."  

Eury, Baker and Hernandez are among a strong lineup of submarket experts at Bisnow's Future of Downtown event Sept. 18. Register now.