Houston Retailers Respond to E-Commerce with Experiential Projects

Buffalo Heights, a mixed-use project with proximity to Houston’s Memorial Park and downtown areas, offers the kind of experience-driven retail scene that is prevailing in the e-commerce era.

For the past several quarters, the headlines of most CRE publications in Texas and beyond have proclaimed the end of retail as we know it.

By now, we’ve all heard the stories and seen the writing on the wall: e-commerce will kill the shopping mall; large anchors that landlords have counted on for decades are shuttering and Amazon will be the end of the retail storefront.

It’s a familiar tale as of late. But amid the doom and gloom of store closings, Houston seems to be staying on top of the trends, as its retail market remains healthy and appears to be moving ahead. In fact, despite losing over 70,000 oil-related jobs since 2015, Houston’s retail market remains one of the strongest in the country, posting an average

Lindsey McKean, The J. Beard Real Estate Co.

Lindsey McKean, The J. Beard Real Estate Co.

occupancy rate of 95 percent. In addition, employment growth in the retail sector grew 5.1 percent in 2016 amidst the oil bust.

Despite these strong retail indicators in Houston, the aforementioned market changes do have an effect on the retail environment. And while retailers themselves need to make the biggest adjustments, developers and landlords are not without their own challenges.

Like the rest of the country, Houston retailers must figure out ways to offer up something that Amazon cannot put in a box and ship to the consumers’ doorsteps the next day (or even the next hour). Rather than simply offering products for sale, today’s retailer is going to have to find an interesting way to give the consumer a unique experience in the purchasing of goods. This experiential factor cannot be duplicated from the consumer’s couch.

Landlords face the challenges of these shifting environments much the same as retailers face the challenges of meeting the need for updated, innovative, more lifestyle-focused centers. Health consciousness is another consumer trait that is creating a swing from exhausting the income production of every last foot of space to centers with more green space, walkability and restaurant and tenant choices that are more health-focused.

There are several projects in Houston that are tackling these changes head-on by leaning heavily on entertainment options and open-air, pedestrian-driven retail with an increased balance of service and restaurant tenants.

The new Post Oak Boulevard redevelopment project in Houston’s Uptown District exemplifies the kind of future changes that we will likely see among retail developers and owners. This project is focused on creating more of an experience which will draw consumers with pedestrian-friendly walkways, highly aesthetical landscaping and lighting, and parking plans to make the “experience” of Post Oak shopping and dining one that cannot be duplicated.

Another project poised to confront the changing nature of retail is the new Buffalo Heights project on Washington Ave. and S. Heights Blvd. With this seven-story, mixed-use project, the urban influence takes the form of a new H-E-B grocery store prototype with mixed-use residential, office, and retail — a place where you can get everything you need in one stop without a vehicle.

Midway’s Memorial Green project also seems to focus on the “live, work, play” lifestyle, but on the luxury level. With high-end residential, boutique office, luxury retail and upscale dining space with plenty of patio seating, the project offers an environment that encourages consumers to stay awhile.

These adjustments are not only being made in the city, but also in outlying markets. Developers in high-demand outer areas are also taking steps to ensure they are not behind the times.

Kimco’s 500,000-square-foot Grand Parkway Marketplace in Spring, Caldwell’s Towne Lake Retail in Cypress and Howard Hughes’ Hughes Landing in The Woodlands are all lifestyle center projects that include boardwalk-style promenades with waterfront restaurants, shops, hotels and residential space to entice consumers with a more experience-driven retail scene.

With so many retailers and developers embracing the change in the retail market, Houston is equipped to continue to buck the status quo and challenge the national perception of how the retail market is performing.

— By Lindsey McKean, broker, The J. Beard Real Estate Co. This article first appeared in the July 2017 issue of Texas Real Estate Business magazine. 

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