By Kenneth Katz, principal at Baker Katz
Growth and innovation opportunities remain strong in Texas, despite ongoing changes in the retail sector. True potential often emerges not just from redeveloping individual buildings, but also from reimagining the future of entire communities. Identifying underutilized retail assets where others see stagnation — and meticulously transforming them into vibrant, value-generating destinations — is key to successful retail redevelopment projects.
At its core, redevelopment is a response to change. When commercial properties are first built, they are typically developed to meet a market’s needs in terms of an appropriate tenant mix, functional layouts, attractive aesthetics and other key attributes. Over time, however, as communities evolve, populations shift, infrastructure expands and tenant preferences and tastes change, previously optimized projects can gradually underperform. These shifts create opportunities for thoughtful redevelopment.
Identifying Strong Candidates
Properties that no longer meet the desires or needs of a community are often the strongest candidates for redevelopment. These can include projects with outdated configurations, limited accessibility due to changes in roadways or high vacancy rates from tenant relocations or bankruptcies. Other high-potential properties may suffer from deferred maintenance that has reduced occupancy and rents or from aesthetic obsolescence that discourages both customers and quality tenants.
Across Texas, the opportunity is amplified by the state’s consistent population growth. Last year, for example, South Texas alone — including San Antonio, Corpus Christi and the Rio Grande Valley added 562,941 residents, according to the U.S. Census Bureau. That number represents one of the largest numeric gains in the country from 2023 to 2024. This growth generates retail demand in both urban and suburban markets, creating prime conditions for redevelopment.
One example is Four Corners in Tomball, a northeastern suburb of Houston, that is a redevelopment of a 1980s-style shopping center formerly anchored by Kroger. Kroger’s relocation across the street and the construction of a new freeway behind the center created an opportunity. The 110,000-square-foot center was renovated with enhanced aesthetics, landscaping and improved accessibility, and the large box was reconfigured into multiple smaller spaces to better align with market demand.
Breathing New Life into Outdated Spaces
Redevelopment projects can span a variety of scales and scopes. In Atascocita, another Houston suburb, a neglected project constructed in 1984 was revitalized with a new parking lot, upgraded landscaping and façade improvements, attracting higher-quality tenants at increased rental rates. The Shoppes at West Lake Houston now features 150,000 square feet of space that is anchored by a 24-Hour Fitness.
In some instances, underutilized sites can be transformed into revenue-generating destinations. In Port Arthur, Texas, an old lumber warehouse and yard were reimagined as a vibrant retail project. Now known as The Shoppes at PA, the once-bleak metal structure now includes a PetSmart, Hobby Lobby and a newly constructed outparcel building occupied by Firehouse Subs, Chipotle and additional retailers.
Pecan Park Plaza, a dated shopping center located southeast of Houston in League City, was recently revitalized with a series of upgrades, including a repaved parking lot, new pylon signage, enhanced landscaping and renovated building exteriors. To further showcase community pride and strengthen its sense of place, a colorful mural was created in partnership with a local artist and the city.
These examples reflect a broader national trend, with a CBRE report noting retail development as a key driver in revitalizing aging shopping center. This trend is expected to continue, as consumers seek more convenient, experiential and community-centered retail environments.
Engaging Communities in Meaningful Redevelopment
Redevelopment projects often require extensive coordination among cities, developers and community members. While opposition can sometimes be loud, many residents welcome revitalization — particularly when redevelopment reflects community interests and priorities. At the heart of every successful redevelopment is trust.
Strategic investment has the power to shift perceptions and spark broader momentum. At Brenham Crossing, for example, the transformation of a single site helped raise expectations for future development across the market. Still, there is often a gap between community aspirations and what is realistically achievable. During the early stages of one redevelopment project, residents voiced a strong interest in Whole Foods; however, the area’s demographics and the retailer’s criteria were not a fit. In these moments, transparency and collaboration are critical.
According to the Urban Land Institute, successful redevelopments often incorporate public feedback and placemaking strategies, with the ultimate goal of delivering projects that create lasting value for the community, even if not every initial wish can be met.
Overcoming the Challenges
The biggest hurdle in redevelopment is not only identifying underperforming assets, but acquiring them at prices that make economic sense, given the time, risk and capital required.
Leases can also pose challenges. Even when an outdated center seems ready for redevelopment, existing leases can complicate the process and limit meaningful change. Timing is crucial; understanding when leases expire or when tenants are open to relocating or adapting often makes the difference.
Adding to the complexity is today’s high-interest rate environment. The Federal Reserve has signaled that short-term interest rate cuts may be on the horizon, yet the cost of capital remains a key consideration, requiring redevelopment projects to be planned with resilience in mind.
Redevelopment goes beyond cosmetic upgrades. It requires a strategic, long-term approach that combines local insight with careful execution. Revitalizing underutilized assets relies on vision, experience and a deep respect for the communities these properties serve.
Kenneth Katz is principal at Houston-based Baker Katz, a full-service commercial real estate brokerage firm specializing in retail tenant representation, project development, and leasing. To connect with Kenneth directly, email kkatz@bakerkatz.com.