With fundamentals that make hearts go pitter-patter and development picking up (even in property types you wouldn't expect), retail is getting that euphoric touch we've been feeling in other sectors. Weitzman SVP James Namken broke down five things that make Houston retail a hot commodity.
1. Record-breaking occupancy
Our retail market posted its best overall occupancy in a decade: 96%. (You probably noticed it's easier to find a square dancing partner at building-wide hoedowns.) Retailers continue to expand to secure locations here; they’re drawn to us because we’re one of the country’s economically healthiest metros. One big positive to occupancy is backfilling vacant space—Weitzman filled most of the former Macy’s in Texas City this year; Palais Royal took 23k SF, and World Gym leased 44k SF. Pictured: James with Cencor office head Steve Chandler.
2. Construction is up
Retail construction is more than double that of 2013, with 1.6M SF delivering this year. It’s been the slowest sector in Houston to pick up shovels. But as the market has tightened, developers have planned new projects. Of course, we’re still way below our historical norm—from ’04 to ‘08, we averaged about 4M SF annually. Here, Randy’s with VPs Randy Hopper and Kyle Knight.
3. Grocers aren’t giving up their crown
Although mixed-use is picking up, the bulk of our development is still grocery-anchored. Whole Foods, HEB, and Kroger are particularly active. Whole Foods announced its Hughes Landing location and opened stores in Vintage Marketplace and BLVD Place. HEB just opened its second Pearland market, and Kroger delivered three big stores: a 124k SF Marketplace in Towne Lake, a 123k SF location anchoring Spring Marketplace, and a 100k SF store in Humble.
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4. Malls are still big here
We’ve got two major mall expansions in the works when enclosed-mall construction nationwide is all but dormant. The Galleria is growing—Saks opened a new 198k SF store, freeing up 110k SF in the Galleria to be subdivided into restaurants and retail. The mall is also adding a multifamily tower. Baybrook Mall—pictured—is expanding by 555k SF, anchored by the 42k SF Star Cinema Grill. That’ll bring the facility to 1.7M SF when it opens at the end of next year.
5. 2015 will be better.
Hold onto your hats, y’all.
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