New H-E-B In The Heights To Improve Shepherd Drive's Appeal

H-E-B opened a multistory location in the Heights this week, and it is expected to significantly increase the appeal of the Shepherd corridor.

The new 92K SF store, at 2300 North Shepherd Drive, includes a two-story parking structure, 50 bike-rack parking spaces, a coffee shop called The Roastery, designated spaces for curbside grocery pickup and a drive-thru pharmacy. Heights residents passed a measure in 2016 to allow beer and wines sales, which greatly spurred the H-E-B's development. 

The Shepherd corridor has grown in the last five years, NAI Partners Vice President Larry Koestler said. Developer Bryan Danna redeveloped a former auto body shop into a modern retail center on the northwest corner of 19th Street. New retailers such as Mellow Mushroom and The Burger Joint also opened nearby. 

"It is safe to say that we are likely to see continued retail redevelopment and expansion," he said. 

A roughly 1-acre tract is available for sale adjacent to the new H-E-B location, according to NAI Partners' website. The firm declined to comment on interest in the property. 

Once H-E-B publicly announced the Shepherd location, the perspective of the intersection immediately changed, Baker Katz principal Jason Baker said.

“The stores have increased property values and increased demand from traditional retail and restaurants," he said. "The list is long.”

That isn't surprising; he couldn’t pinpoint one example of where an H-E-B opening didn’t positively benefit the community.

Deal Sikes has done numerous studies that backed that — building an H-E-B drives demand for properties around it, the valuation company concluded.

"H-E-B, like other successful retail anchors, only commits to a location once the supply of rooftops warrants it," Deal Sikes principal Matthew Deal said. "And once H-E-B commits, smaller users are sure to follow." 

While H-E-B is a driver of ancillary retail development and overall market demand, its placement there in the first place is indicative that the submarket is primed for retail development, he said. Housing is typically the next wave; retail establishments provide needed goods and services that drive future demand and development of single and multifamily residential in a market area. 

Grocery Wars 

Many grocers are ramping up with either more urbanized or suburban locations, while others will halt expansion in 2019, according to the Wulfe & Co. annual retail survey. San Antonio-based H-E-B is expected to once again dominate the pipeline with seven stores planned. 

A new two-story Inner Loop store is planned for Meyerland Plaza, according to the Weitzman 2019 Retail Forecast Report. Construction will begin this year and will replace the store at Chimney Rock and South Braeswood that flooded in Hurricane Harvey. Buffalo Heights will feature a 96K urban prototype H-E-B on the ground level of the mixed-use project.

Germany-based Aldi will follow with six stores on a smaller 20K SF footprint, per the Wulfe & Co. survey. Sprouts and Whole Foods will each open one new store. Neither Walmart, Kroger nor Target will open a store in 2019. 

H-E-B is the largest grocer in Houston with 95 stores and 27.7% market share, followed by Walmart with 101 stores and a 25.1% share, and Kroger with 112 stores and 22.5% share, according to Wulfe & Co.