Executing ground-up development for pure-play retail space — or retail product in mixed-use settings — in Houston is immensely challenging these days for a variety of reasons. This is in spite of the fact that the city has the underlying job and housing growth needed to justify a greater inventory of retail product. While all retail developers in Houston face similar headwinds in terms of costs of capital and construction materials/labor, as well as elevated tenant improvement (TI) costs and hefty required return thresholds from investors, it’s difficult to single out any one of those factors as most responsible for the dearth of new retail development. Some issues will be felt more acutely in some submarkets than others. Certain companies may have better connections and capital situations such that they can circumvent some of the uncontrollables. But no matter the combination of barrier-to-entry factors, the net result is the same: a market that cannot adequately supply retail product to meet demand. Editor’s note: InterFace Conference Group, a division of France Media Inc., produces networking and educational conferences for commercial real estate executives. To sign up for email announcements about specific events, visit www.interfaceconferencegroup.com/subscribe. At the annual InterFace Houston Retail & Mixed-Use conference that …
