HOUSTON – (Realty News Report) – Inner Loop retail space is tight. Only 70,000 SF of Inner Loop space is vacant, reports NAI Partners.
“The flight has been to the Inner Loop,” says Jason Gaines, leader of the retail division at NAI Partners. Inner Loop rents are around $42 per SF.
Overall, Houston’s retail center market is good with rising rents, strong absorption and the vacancy rate around 5.5 percent.
A degree of uncertainty overshadows the market as national retailers are closing stores in the face of competition from online retailers, Gaines says. And the national retailers seem to be scaling back the size of their stores.
Hobby Lobby, for example, used to operate 40,000-SF stores. Today, Hobby Lobby is looking for 22,000-SF stores, Gaines says. Many retailers are “downsizing their footprint.”
Traditional regional malls, which once ruled retail with anchors like Sears and J.C. Penney, are shedding their old skin and transforming into other uses.
“We are transforming our properties from apparel-base traditional and closed malls to market-dominant suburban town centers with a more diverse tenant base,” said Stephen Lebovitz, CEO of CBL Properties, which owns major retail centers in 26 states, including the Pearland Town Center.
Forty anchor stores have closed in the mall portfolio of CBL, a Chattanooga-based REIT. The New York Stock Exchange recently announced it was delisting CBL’s stock because the stock price has languished below $1 a share. CBL said it would cure the issue with a reverse split to raise the stock price.
The problem of failing anchor stores is being fixed by redeveloping the anchor-store spaces, bringing in entertainment, fitness centers and other uses. “With the 40 anchor closures we’ve recently experienced, it’s critical that replacements are in place as soon as possible to stabilize the properties and reverse negative revenue trends,” Lebovitz told shareholders recently.
To the anchor replacements, CBL is transforming its properties by adding a wide range of uses and experiences, such as entertainment, value retail, multi-family, hotels, office and grocery
CBL said it has 24 of the 40 former anchor spaces committed or under construction, including eight already open and six slated to open before year end.
“The success of our anchor replacement program to date reflects the strong demand we are experiencing at our properties,” said Lebovitz, former national chairman of ICSC. “Our vision of transforming our properties from traditional enclosed malls to suburban town centers is coming to fruition.”
CBL’s Pearland Town Center, located 110 acres at Highway 288 and FM 518 is anchored by Dillard’s and Macy’s and it has 644,920 SF of gross leasing area. CBL’s stock closed at 83 cents a share on Tuesday.
Sept.4, 2019 Realty News Report Copyright 2019
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