Discount Stores, Experiential Real Estate Help Backfill Houston’s Vacant Retail Spaces
A grocer shuttering three Houston-area stores plus the failure of two legacy chains added 625K SF of vacancy to Houston’s retail market, edging its vacancy rate over the national average.
But backfill from discount stores, fitness and experiential retail helped it maintain a “healthy” 95.1% occupancy while another 1M SF of deliveries are expected this year, according to a midyear report from Weitzman.
This puts Houston’s retail vacancy at about 4.9%, slightly higher than the national average of 4.2%, according to Colliers, but lower than any other asset class in Houston. Colliers ranked Houston seventh among the nation's top 10 metro retail markets based on vacancy rates.
"Occupancy is maintaining its stability thanks to a steady influx of expanding box retail concepts as well as small-shop concepts that are backfilling the market’s available existing space," the report stated.
The failure of Bed Bath & Beyond and its Buy Buy Baby brand as well as the shuttering of Tuesday Morning stores and the closure of three Sprouts Farmers Market locations accounted for the bulk of vacancies. But together, those stores represented less than half of a percent of Houston’s total retail market inventory and the closures were offset by leasing activity in existing space, according to the report.
That includes the 100K SF lease of Shoppers World, a discount department store, at Steeplechase Center on FM 1960 near State Highway 249. It is the first Houston location for the discount brand, replacing an Ollie’s Bargain Outlet and a Target.
Dick’s House of Sport, a new concept from Dick’s Sporting Goods, opened in the 100K SF space that used to house Dick’s Sporting Goods at Baybrook Mall in Friendswood. This is Dick’s House of Sport’s second location in the Houston metro, adding to one in Katy, the Houston Chronicle reported. The store still sells merchandise, but also offers experiences, including a rock wall and a multi-use sport cage featuring interactive baseball, softball, lacrosse, field hockey and soccer.
Another experiential retail addition is Puttshack, a modern mini-golf concept, which opened in April in a 26K SF downtown space at The Highlight, the new name of the renovated The Shops at Houston Center, according to the report.
Discount store additions also filled gaps, including dd’s Discounts, which opened in February in 21.5K SF at the Copperwood Shopping Center, and pOpshelf, which opened a location in Sugar Land and leased 10K SF for another in Humble.
Fitness concepts are backfilling significant retail space as well, according to the report. EoS Fitness leased three Houston-area locations totaling 144K SF in Sugar Land, Katy and Atascocita. The locations are scheduled to open in 2024 and 2025.
Planet Fitness took over an existing box space at 11703 Eastex Freeway and a second-generation junior anchor space totaling 28K SF at 13831 Southwest Freeway in Sugar Land, the report states. World Gym is set to open in the second half of 2023 at the 38K SF former YMCA building at 7903 South Loop E.
Weitzman expects new retail deliveries for 2023 will total just over 1M SF, down slightly from 2022’s 1.2M SF. The expectation remains “on the conservative side, especially for a tight retail market located in a robust major metropolitan area,” the report states, though Houston leads large Texas metros in terms of deliveries. Austin follows with about 921K SF expected, and Dallas-Fort Worth comes in third with an expected 641K SF.
Deliveries expected this year include Manvel Town Center Phase 1, a Weitzman development in Manvel anchored by a 108K SF H-E-B. The town center is designed to incorporate up to 1M SF.
Missouri City’s Fort Bend Town Center Phase 2, which will add about 300K SF, is also expected to deliver this year. In addition, Target will open a 135K SF store at Valley Ranch Town Center in New Caney.
