| TEXAS SNAPSHOT, FEBRUARY 2007
Houston Retail Market
The majority of development is taking place in two places — the Inner Loop (within Loop 610), and master-planned communities, according to Tony Armstrong, a commercial retail real estate broker with Houston-based Page Partners. “Development is following population and income,” Armstrong says.
One product type of particular favor in Houston is mixed-use development. “Mixed-use projects have really taken hold in Houston,” Armstrong says. Increasing land prices and the growing interest in in-fill locations are driving this trend producing retail, office, residential and hotel options within each project. Examples include La Centerra at Cinco Ranch, which is a retail-oriented mixed-use development being built in the Cinco Ranch master-planned community. CityCentre - Town & Country is a major mixed-use redevelopment of the former Town & Country Mall in the Memorial submarket, adjacent to the existing lifestyle center Town and Country Village. Moving to the Southwest, Sugar Land Town Square is a mixed-use development that is approximately 83 percent leased. Pearland Town Center, which is being developed by CBL Properties, is another good example of an open-air, mixed-use development.
The submarkets of Houston are seeing quite a bit of development because of the large number of people moving into master-planned communities such as Pearland, Sugar Land, Katy and The Woodlands, according to Armstrong. These areas are increasing in population density at a fairly rapid rate. As an example, Lake Point Village Shopping Center in Sugar Land is currently under construction at the Northwest corner of US 59 and Highway 6 and will be anchored by a 55,000-square-foot Whole Foods Market. Bass Pro Shops will anchor Poag & McEwen’s Pearland project, The Promenade Shops at Shadow Creek. “We are seeing less non-anchored development. The majority of space that is being built currently consists largely of big box retailers such as Target, Wal-Mart, JCPenney and H-E-B.”
It’s not just the suburbs that are seeing activity in Houston, which currently boasts a retail vacancy rate around 11 percent. Houston is undergoing a revitalization in its city core and the surrounding submarkets. For example, the High Street project, formerly a car dealership, is a 6 acre mixed-use development situated between Highland Village and The Galleria. Houston Pavilions will breathe new economic life in downtown with its entertainment, retail and living components. In addition, a large tract of land was purchased from the Houston Independent School District and is being developed into a Costco-anchored project with multifamily being built on part of the tract as well. “This trend can be seen primarily in downtown, Midtown (periphery of downtown), and in and around the Galleria/River Oaks areas,” Armstrong says.
With Houston being one of the largest cities in the country, many national and local developers are fulfilling the retail needs that come with a growing population. Some of the more active companies include Gulf Coast Commercial, Property Commerce, Planned Community Developers, Satya, Inc., Vista Equities Group, Orr Commercial, New Quest, Trademark, Wulfe & Company and Trammell Crow Development.
Retailers are taking note of Houston’s growth as well, as new companies enter the market every month. Wild Oats, Mi Tienda (an H-E-B concept), Dick’s Sporting Goods, Pot Belly Sandwiches, Tutor Time, New York & Co., Elephant Bar, The Counter, Downtown Locker Room, The Mutual Fund Store, Helio, Z Tejas and Eddie V’s are just a few of the new retailers coming to Houston.
In the coming months, three submarkets to keep an eye on are Pearland, Katy and The Woodlands. “This is largely due to the velocity of residential growth and development that has taken place in such a short period of time,” Armstrong says. “With this growth we have seen high-quality power centers, grocery-anchored shopping centers, mixed-use and lifestyle projects follow.”
Another area to keep an eye on is the U.S. 290 Corridor, according to Armstrong. “TxDOT has approved plans to widen U.S. 290 due to the rapid growth and because this is one of the heaviest traveled arteries into and out of Houston,” he says. “Between Loop 610 and FM 2920 there is a population of approximately 412,000 and that is expected to almost double in the next 20 years.”
Houston continues to be a strong market from a retail perspective and looks to remain that way for the foreseeable future. “With steady home growth and an increasing population coupled with a low cost of living, we hope that the positive trends we see today will continue.”
— Tony Armstrong is a commercial retail real estate broker with Page Partners in Houston.
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