The Galleria permanently changed Houston’s retail landscape.
Upscale development became blueprint for success, drawing millions every year
The sparkling mecca of retail and more attracts roughly 30 million visitors a year to its shops and hotels. It reshaped the entire southwest corner of the city into a second downtown and inspired how shopping malls and mixeduse projects were developed in the following decades.
But before the Galleria was born in the 1960s, the land at Post Oak and Westheimer was mostly open countryside, where Italian farmers had called home for generations. Only 7 miles from downtown, the area nonetheless was considered a suburb. Loop 610 had not yet been built. Westheimer was known as Farm to Market Road 1028.
But Gerald Hines, a developer in his 30s from Indiana who had developed only a string of warehouses and office buildings up to that point, took a chance and thought the land was perfect for a first-of-its-kind shopping, office and hotel center. He followed a few retail stores into the area, attracted to the wealthy of nearby River Oaks, Memorial and Tanglewood.
But his project was by far the most ambitious and ultimately transformative.
“The job of a developer is to come up with ways that create value and then hopefully a successful project. And the Galleria is a successful project,” Hines said in a PBS documentary “Post Oak Boulevard: A Texas Legacy.”
His idea for a multistory shopping mall that included office and hotel did not always seem like the wisest of investments. The young developer took on a disproportionate amount of equity, meaning he would assume most of the profit and all of the risk. He made generous deals to acquire the land and to attract his first anchor, Neiman Marcus. He created a design that was extremely unusual for the time.
“He put it all on the line,” said Louis Sklar, a former Hines executive, who helped develop the Galleria.
The design, Sklar explained, was meant to keep traffic and visitors going at all times, hence the multiple uses for office, hotel and shopping. The unusual, multistory structure meant visitors had to enter at different floors, ensuring traffic on all the floors, he said. The ice-skating rink, for example, was meant to keep traffic high on the ground floor to keep rents there higher.
Sklar said Hines gave generous deals at first to attract the tenants and it was about 60 percent full when it opened.
“That was a make-or-break time for me,” Hines, now 90, said in a recent interview with the Chronicle.
The company was also developing the high-rise One Shell Plaza in downtown at the time. His now-international real estate firm later developed Galleria Dallas, and is known for building Pennzoil Place, Republic Bank Center (now Bank of America), First Colony in Sugar Land and Williams Tower.
The Galleria influenced future mall projects.
Hines said one of his regrets was not trademarking the name Galleria. After his project opened, several copies opened throughout the country.
The enclosed, upscale, multistory mall became the go-to design for shopping malls in the 1970s. Hines said he was originally inspired by the Galleria Vittorio Emanuele in Milan, Italy. Built in 1867,one of its central components is a dramatic steel and glass atrium. A glass vault dome was one of the Galleria’s defining features.
The first phase of the Galleria, a three-story, 600,000-squarefoot development, opened in 1970. It featured the first indoor ice-skating rink in a U.S. mall. Its anchor, Neiman Marcus, had opened in 1969. The Galleria continued to grow, and today it spans 2.4 million square feet with 400 stores and restaurants, two high-rise hotels and three office towers where roughly 7,000 employees work for various companies.
The shopping mall is one of Houston’s top tourist destinations. Of its 30 million visitors, a third are international.
The property was eventually purchased in 2003 from Hines by then-Simon Property Group. Simon, based in Indianapolis, owns more than 200 malls and shopping properties across the U.S. and in Asia and Europe. Locally, Simon also owns Katy Mills, Houston Premium Outlets in Cypress and Tanger Outlets in Texas City.
The Galleria boasts 81 stores exclusive in Houston, 26 of which are exclusive in Texas. The mall generates $1.4 billion in annual sales, and Simon said each department store grosses more than $100 million in sales. Both Saks Fifth Avenue in Houston and Neiman Marcus rank No. 2 in sales in their respective companies, behind only Saks in New York and Neiman’s in Dallas.
The current owners have made a $250 million investment in the highest end of the mall, adding a new Saks Fifth Avenue and a standalone building dubbed “the jewel box” with an upscale retail store and restaurant. The most recent announcement was a plan to build a 30-story luxury hotel and residential tower with 225 hotel units and 75 to 100 condominiums.
“We just want to keep her looking beautiful,” said Randy Schumacher, operations director, who has worked at the Galleria for 33 years, first for Hines, now Simon. “It’s all about making sure it’s the No. 1 mall in the United States.”
The Galleria has been the anchor, catalyst and linchpin behind the region’s retail growth.
“Guys like Gerald Hines had these wonderfully crazy ideas about doing something called the Galleria, and it changed the area so much,” said John Breeding with Uptown Houston, in an interview on the PBS documentary.
Uptown, the neighborhood anchored by the complex, is one of the top 15 biggest office markets in the U.S., roughly the size of downtown Denver and Pittsburgh, according to the Uptown District. It has 28 million square feet of commercial office space, home to energy, financial and real estate offices.
In recent years, it’s increasingly become a place where people want to live. Condominium tower and apartment development there has pushed residential development past retail as a percentage of overall real estate in the area. Uptown is now 28 percent residential, compared with 25 percent retail.
“We have created an area that makes people want to live, to choose to buy a condominium, or perhaps aspire to own a condominium or lease a luxury apartment,” Breeding said. “People choose to want to live there.”