LAS VEGAS — Despite initial hesitation about the effect falling energy prices had on the area’s economy, national and international retailers remain keen to enter the Houston market.
“We’re seeing renewed interest from national retailers wanting to be in Houston — particularly areas such as the Inner Loop and East Houston, among others,” says Crystal Allen, Senior Vice President on Transwestern’s Houston retail team. “The area around the Grand Parkway is also getting a lot of interest from national retailers, too.”
Allen was one of the 37,000 attendees at this year’s ICSC RECon, the world’s largest retail real estate convention — a gathering of more than 1,200 exhibitors taking nearly 1 million square feet of space in America’s gaming capital, where power deal making and round the clock networking was the order of the day.
Millennials and malls were hot topics including bricks and clicks and the health of the U.S. economy. Numerous speakers noted the retail sector is undergoing major changes, driven by a shift in consumer preferences. E-commerce is not the only problem retailers face in the years ahead. Consumers, especially millennials, are bored by the shopping experience at the nation’s malls and shopping centers.
Hessam Nadji, CEO of Calabasas, Ca.-based brokerage firm Marcus & Millichap, summed it up succinctly: “Massive retail opportunities ahead, with a chance of disaster if you are not careful.”
Food, wellness, fitness were among the trends seen by retail entrepreneurs at RECon, with some of those outlets appearing already.
New concepts coming to Houston include more dining in cinemas and bowling facilities and more focused retail experiences like MOD Pizza, a Seattle-based chain of fast casual pizza restaurants where fresh-pressed dough is baked for three minutes in an 800-degree oven to create artisan pizzas and Mediterranean dining specialist Zoës Kitchen, a fast casual restaurant chain headquartered in Plano, Texas, serving a variety of chicken salad, pasta salad, pitas and grilled chicken sandwiches. Zoës Kitchen recently retained Transwestern to help double its footprint in the Houston area.
Retailers new to Houston are not worried that restaurant sales dipped 5-10 percent last year because of the energy downturn, adds Allen. “We have high-volume restaurant sales in Houston, and it’s a dominant market,” she adds. “A lot of fast casual restaurants are circling Houston looking for numerous locations to open. Despite how big Houston is, some retailers think they can achieve market coverage with only 10 locations in the beginning, when they really need 20 to 40 locations to get full market coverage in the long term.”
In addition, Houston’s East Side continues to attract the interest of national and international retailers, Allen said, because the area’s economy — with the Port of Houston and the region’s growing petrochemical sector — remains strong. “There is a lot of development on the East Side with strong housing growth and higher incomes that attract new retailers,” she added.
Allen says that Houstonians should be seeing more boutique fitness offerings such as new locations and operators for yoga, spinning and Pilates. “Many of the new fitness retailers entering Houston are coming from California,” she adds. Houston’s the grocery sector in the outlying suburban market.”
Still, RECon participants were told numerous times that many of today’s mall tenants are not offering consumers a compelling enough experience to shop and are not differentiating themselves sufficiently. So buyers are turning to the Internet.
Buying online is growing, says Anjee Solanki, national director of retail services at Colliers International. “For the first time, online retail is forecast to account for more than $1 out of every $10 spent in 2017,”she adds. “In five years’ time, physical stores will still account for the vast majority of retail spending.”
Consumers who have reduced their visits to shops complain that stores are dull, uninspiring, difficult to find things, rarely have new things to look at and offer a poor customer experience. “Physical retailers that can still drive success — if they deliver interesting and engaging experiences that pull in shoppers.
From a growth perspective, U.S. retail as a whole is performing reasonably well. Over the next five years, spending in all major sectors is projected to increase, although the pace of growth likely won’t be even, says Colliers U. S. Chief Economist Andrew Nelson. “Today, many consumers shop seamlessly across the various touch points, using a combination of stores and online channels. In essence, this means that physical stores are driving significantly more than the $3.2 trillion of spend that went directly through them in 2016.
June 1, 2017 Realty News Report Copyright 2017