News & Articles : Shopping Center Business


Posted on November 04, 2004 in

By: Blake Tartt III, CEO & President of New | Regional | Planning

If asked to describe a Houstonian, you’d probably conjure up images of cowboy hats, boots and jeans. You’re right, partially! But, Houston is far more than the stereotypical Texan. With more than 90 languages spoken, Houstonians enjoy one of the most diverse profiles of any major metropolitan area in the country. Retailers, large and small, are attracted to the vast potential Houston has to offer.

Stretching more than 8,000 square miles, the Houston retail scene is made up of a number of major urban and suburban markets. Houstonians love convenience. Rooftops drive retail whether they are in the revitalized inner city or in the city’s “edge” communities.

Houstonians are also rather unique in their propensity for “buying” over “shopping.” Affluent Houstonians travel to upscale retail markets, shopping on the coasts to satisfy their appetite for the retail “edge.” The balance of the market values convenience, proximity and value in their selection of retail centers with a buying mentality.

Responding to Houston’s expansive geography, the city’s mall sector resembles a hub-and-spoke with The Galleria at the center and a number of malls strategically located on the perimeter near population centers. While retaining its prominence as Houston’s premier tourist attraction, The Galleria is at the mercy of the economy for its volume of retail traffic. Several of the city’s malls, including The Galleria, have undergone redevelopment and expansion to achieve a targeted mix of department store, specialty and small shops. Catering to the customer is key.

Following national trends, big box retailers like Wal-Mart and Target are expanding and tracking Houston’s growth. Their success is fueling consolidation in this sector. The closing of Kmart and Service Merchandise, coupled with consolidation in the grocery market, has left Houston with a number of unanchored centers. A few of these vacancies have been reinvented with adaptive reuses with anchor tenants like the city’s community college system. Others remain vacant, waiting for their next life.

Trendy mid-box centers are attracted to Houstonian’s appetite for their wares, but are highly discriminating when considering new locations and sensitive to the potential cannibalization of one market in favor of another. Site selection models zero in on shopper profiles with attention to issues like drive times and shopper convenience.

Dramatic growth in Houston’s master planned communities, like The Woodlands and Cinco Ranch, has provided excellent opportunities for neighborhood retail development. Houston is one of the best markets in the country for small business owners prompting growth in mom-and-pop shop owners and franchisees, particularly in neighborhood centers. Marketing programs addressing the unique requirements of this segment offer flexible lease structures, build-out allowances and management agreements.

With oil prices hovering at $50 a barrel, it’s easy to forecast growth in the Houston economy. The city enjoys one of the lowest unemployment rates in the country with a low cost of living, range of affordable housing options and diverse labor base.  All of these factors and more make Houston a retail location of choice.