With 2016 having gone down as an overall strong year for the retail sector in Houston’s commercial real estate scene, things are looking relatively positive for 2017. Some of the defining trends of 2016’s retail market as well as new challenges are worth paying attention to in 2017.
How retailers adapt to inner Loop challenges
Retail dominates the suburbs through big-box shopping centers and mixed-use developments such as CityCentre, the new Imperial Market development in Sugar Land and the Baybrook Mall expansion. But retail inside the Loop is undergoing a transformative moment. Retailers are going vertical, as evidenced by Midway Cos.’ recently announced Buffalo Heights project, which will be anchored by a multilevel store by San Antonio-based H-E-B Grocery Co.
Meanwhile, Houston can expect more adaptive reuse in retail as developers work to find locations in an increasingly dense inner Loop. For example, work is underway to turn a former warehouse property into a new community-focused mixed-use project called EaDo Workspaces in East Downtown.
“Urban retail is hot,” Jazz Hamilton, first vice president with CBRE’s retail brokerage services group in Houston, told the Houston Business Journal. “Reusing and the refurbishing of warehouse space – that’s hot right now. And retail going vertical is not just hot, but it’s like you’re forced to go vertical.”
- The closing of brick-and-mortar stores
Last year claimed a lot of big box retailers such as Sports Authority, Aeropostale, Golfsmith and, most recently, the Limited. As more and more Americans opt to skip the lines at brick-and-mortar stores in favor of shopping online, this will be something to keep an eye on. About eight out of 10 Americans are now online shoppers — 79 percent have made an online purchase of any type and 51 percent have bought something using a smartphone, according to a December survey of U.S. adults from the Pew Research Center.
Meanwhile, Cincinnati-based retail giant Macy’s Inc. announced Jan. 4 that it will close 68 of its 870 stores and streamline its management. Three of the stores are in Houston: in Greenspoint Mall, West Oaks Mall and Pasadena Town Square.
- Can downtown become a destination?
Urban planners are wrapping up years-long projects that aim to establish downtown Houston as a destination for locals as well as visitors. Many of these projects were planned long before Houston was selected to host the 2017 Super Bowl.
Downtown’s convention center district has been revamped and renamed as part of a $175 million makeover that started in 2014. Urban planning entities rebranded the area enclosed by the convention center, Discovery Green, the new Marriott Marquis and the Hilton Americas as “Avenida Houston” rather than the convention district. The street that separates the convention center from Discovery Green, Avenida de las Americas, has been confined to two lanes from eight in a move that made way for what is being dubbed restaurant row. Grotto from Landry’s, Bud’s Pitmaster BBQ, McAlister’s Deli, Pappadeaux Seafood Kitchen and Kulture from the owners of the Breakfast Klub will all open in that space.
Meanwhile, six new restaurants, including a highly anticipated new concept called Xochi from Hugo Ortega, will open inside the Marriott Marquis.
However, whether Houstonians will frequent these restaurants is anyone’s guess.
“Downtown Houston is not the tourist destination like New York, Chicago or Philly. It’s different,” Hamilton said. “Houstonians are still not thrilled about driving to downtown and paying to park. (Retailers) are still catering to the business traveler that’s down there because of their office space or a conference center.”