Retail space growing
City on pace to add 2.7 million square feet in projects, down from 3.4 million last year
Developers are on track to add millions of square footage, but the pace has slowed.
Developers are on track to add 2.7 million square feet of retail space in new and expanded projects in the Houston area this year, down from last year’s 3.4 million square feet in 2016 and well below pre-recession peaks, according to a midyear report by commercial real estate firm Weitzman.
Much of the new space is already spoken for as grocers and discount retailers continue to expand in high-growth suburban areas.
“You’re still seeing a fairly limited amount of spec space, which keeps occupancy high,” Weitzman vice president of communications Ian Pierce said. “It’s demandbased construction.”
Retail occupancy dipped to 95.1 percent at midyear from 95.6 percent at the end of 2016. The drop came as closures by Macy’s and Gander Mountain put nearly 1 million square feet back on the market. Still, Weitzman reports the occupancy rate is strong by historical standards.
Much of the construction is concentrated in groceryanchored shopping centers along the Grand Parkway, but retailers are also going into urban redevelopments. H-E-B, for example, is replacing its Bellaire store with a two-story location. The grocer also will anchor Buffalo Heights District, a
“You’re still seeing a fairly limited amount of spec space, which keeps occupancy high.” Ian Pierce, Weitzman vice president of communications
mixed-use development going up at Washington Avenue and Heights Boulevard.
In Texas, Houston trails only the Dallas-Fort Worth region, which is projected to get 3 million square feet of additional retail space in 2017. Some Dallas concepts are coming this way.
Rodeo Goat, which opened an icehouse serving burgers and craft beer in an industrial area near downtown Dallas a couple of years ago, plans a Houston location in East Village, a redevelopment project east of downtown.
East Village recently welcomed Chapman & Kirby, a 10,000-square-foot restaurant and events space, as its first tenant. The project is planned for as much as 100,000 square feet of retail and mixed-use space, according to Weitzman. Houstonbased Agricole Hospitality plans a multi-restaurant space in the development.
New suburban centers have scaled back the amount of space designated for small shops in recent years, Pierce said.
Woodshore Marketplace, a Kroger Marketplaceanchored center at Oyster Creek Drive and Dixie Drive in Clute, south of Houston, includes nearly 28,000 square feet for other tenants. Pierce said that is about half of what would have been allocated for smaller stores in past projects.
Pet Supermarket, a newto-the-market retailer based in Florida that opened 10 stores here, joined the center along with Bahama Bucks shaved ice and others.
The Houston region’s biggest project, Signorelli Co.’s Valley Ranch Town Center at U.S. 59 and the Grand Parkway in New Caney, is getting bigger as new phases open.
Sam’s, Hobby Lobby and Kroger opened earlier this year. Cinemark, Burlington, Ross, TJ Maxx, PetSmart and Rack Room Shoes are slated to open by year-end. The new stores total more than 600,000 square feet.