Houston Retail Square Footage To Grow Nearly 10 Percent This Year
by Terrie Ellerbee/editor-Southwest
Each year, commercial real estate firm Wulfe & Co. releases a survey of Houston’s retail market—and this year’s is a doozy. According to Wulfe, nearly 5 million s.f. of new retail shopping center space will open in Houston this year. That is a 9.2 percent increase over the 4.5 million s.f. that opened in 2016.
According to the Wulfe survey, the addition of that much square footage will meet demand created by the single-family and multi-family housing booms of recent years and population growth in Houston, among other factors.
The report also spells out some of the retail activity that is expected this year. Supermarkets continue to “dominate” new retail construction, representing nearly a quarter (23 percent) of the projected growth, according to the survey. Some of the retailers adding new stores in the Houston area this year include:
• Kroger will open six large stores.
• Aldi will open 10 more stores.
• Walmart will add a Neighborhood Market and three supercenters.
• Target will open two large stores.
• Costco will open a 150,000-s.f. warehouse.
Despite the large increase in retail space vs. last year, 2017 will not set a record in terms of square footage added in Houston. Back in 2008, it jumped 6.26 million s.f. Still, new retail square footage has seen an impressive comeback from 2010 and 2011, when growth slowed to 0.94 and 1.21 million s.f. added, respectively.
Retail occupancy, however, is headed for its highest peak.
“Even with this aggressive expansion of new retail space commitments, overall retail occupancy in Houston will continue to strengthen and approach an all-time high rate in excess of an estimated 94 percent,” said Ed Wulfe, chairman and CEO of the Houston-based retail real estate brokerage, development and property management firm. “Retail rental rates will increase slightly in response to the limited availability of shopping center space and higher land and development costs.
“With the area’s continued growth, along with the expansion needs of both established and new-to-market retailers, the competition for available space in well-located, well-tenanted retail developments is intensive in spite of the higher rental rates,” added Wulfe.
Change in Heights will bring new H-E-B
Competition is hotter than ever in Houston as retailers seek out the right locations to open new stores. H-E-B backed a ballot initiative for alcohol sales in order to make a prime spot in the Heights work. A new H-E-B will replace the former Fiesta Mart on North Shepherd Drive.
H-E-B told several Houston media outlets that the new store was contingent upon being able to sell beer and wine. The area had been a “dry zone” with no off-premise alcohol sales for 116 years, according to attorney Steve Reilley. He chaired a group called the Houston Heights Beverage Coalition, which fought for the sale of beer and wine in that area of Houston formerly known as the City of Houston Heights. Backed by H-E-B, the coalition’s efforts resulted in the issue appearing on the ballot in November, and 64 percent of voters approved the change. The new two-story, 80,000-s.f. H-E-B likely will open next year.
But the first Houston-area multi-level H-E-B will open in Bellaire this year. The H-E-B at 5130 Cedar, which opened in 1994 and was just 20,000 s.f., closed on March 13. It and the shopping center around it have been demolished to make way for a two-story, 70,000-s.f. replacement. That new H-E-B is expected to open this fall.
H-E-B will open its new Champions Forest area store off the Grand Parkway this spring, the Houston Chronicle reports. The Grand Parkway is a relatively new loop that encircles Houston. The first “segment” opened in 2008, and now the project is more than halfway completed, with six of 11 segments open. The new 102,000-s.f. H-E-B at 20311 Champion Forest Drive will have a restaurant and curbside pickup.
San Antonio-based H-E-B also will build a store near Hermann Park. The 72,000-s.f. store will be located at the northeast corner of state Highway 288 and North MacGregor Way, near the Houston Zoo, the Chronicle reports.
A 96,000-s.f. H-E-B will anchor Buffalo Heights, a mixed-use project at Washington Avenue and South Heights Boulevard. It will be part of the first phase of the development, according to the Houston Business Journal.
Kroger will expand its already considerable presence in Houston this year as well. A 100,000-s.f. Kroger will anchor Springwoods Village at Holzwarth Road and the Grand Parkway. It is scheduled to open this summer.
A 123,000-s.f. Kroger Marketplace will anchor the Spring Pines Shopping Center at Spring Cypress and Holzwarth roads. Construction on that project began last summer.
A new Kroger will anchor The Village at Riverstone at the corner of University Boulevard and LJ Parkway. That store is scheduled to open in the spring of 2018.
Kroger also has plans for a Tomball location that will open next year. The Kroger Marketplace will be among the tenants of Grand Parkway Town Center at Highway 249 and the Grand Parkway.
Aldi, which has a distribution center and divisional headquarters in Rosenberg, has grown its store count quickly after opening its first Houston location in 2013. Aldi originally said it would open 30 Houston-area stores. It is nearing that mark with more than two dozen now operating.
Aldi opened a store in Tomball March 9 at 8615 Hufsmith Road. Another will open this spring in the Champions Forest area off the Grand Parkway.
Walmart has brought in-store innovation to Houston. Its supercenter in Tomball at 25800 Kuykendahl Road opened on Feb. 15. The new supercenter offers Scan & Go, which allows customers to scan items with their phones through an app or with devices provided by the store while they shop. They can pay for them instantly, with no need to use a checkout lane. The new supercenter also features large touchscreens that display items shoppers can purchase online and have delivered to the store in two days. The Chronicle reports that it is the only Walmart in the country to have that feature.
The Tomball store houses a 2,000-s.f. Chobani café as well. It is the first café in Texas for the New York-based Greek yogurt brand, whose other two locations are in its home state.
In addition, the Tomball location houses the first Walmart Care Clinic in Texas.
Walmart is building a Neighborhood Market store at 13322 West Airport Boulevard in Sugar Land. The 44,000-s.f. store is expected to open this spring.
Walmart closed two Houston stores last year: a supercenter near Willowbrook Mall and a Neighborhood Market at 2740 Gessner Road in northwest Houston. They were among 154 U.S. stores and 29 in Texas that the Arkansas-based mega-retailer shuttered in 2016.
There are now 29 Randalls in the Houston area following the closure of one in Katy. The banner, now part of Albertsons’ Houston Division, is remodeling its locations in Kingwood and Bellaire, the Chronicle reports.
Albertsons is closing its Randalls distribution center and office in Houston, the Dallas Morning News reports. The company is consolidating its Houston operations with its distribution center and office in Fort Worth.
