Small Retail Centers = Success
Who says bigger is better? Realty 1 Partners (R1)--a group of local investors and construction pros--is developing retail centers across the Houston suburbs in the 15k SF to 20k SF range, and have found it’s a serious sweet spot for investors. (That also explains the appeal of tapas.)
Nexas Commercial prez Stephen Pheigaru (who handles leasing and property management for all R1 properties) and R1’s Beau Evans tell us they developed four projects last year in Houston, and aim to do eight deals this year. They like the smaller range because they lease quickly and many investors like that price point (R1 is merchant building). And apparently tenants and buyers alike don’t need to see a completed project to act. Take Cardiff Commons, which R1 built on FM 1463. The 17k SF property was fully leased before it delivered to tenants in August, and a Chinese buyer is closing on the property next month (just in time for the last few tenants to open).
Long Meadow Farms Center (snapped Friday afternoon) is next on the agenda—it’s 15k SF and delivers to tenants in two weeks. Stephen tells us it’s next to the Santikos Palladium on 99 and the upcoming Gallery Furniture. The latter is behind schedule but has nearly tripled its planned building to 130k SF. (Do they get extra credit for overachieving?) Beau thinks that will drive a lot of buzz, so the team has slowed its leasing and sales process to see what the impact will be. Already, the center is 70% pre-leased and has LOIs out, and a Mexican group has made an inquiry to buy it when it hits 100% occupancy.
The team is breaking ground in March on a 14k SF center on Sawdust in The Woodlands. It’s a Walmart pad site, which is always challenging (Walmart has lots of restrictions), but worth it—Beau says he’d like to do more Walmart pad projects. Perhaps it’s all the multifamily and office development nearby, but this center is attracting an incredible amount of interest. Stephen says the team already has an LOI out to purchase the center, so it’s almost a design-build.
