The Houston area will need to build 5 million square feet of retail annually to keep up with both the population increase and new jobs, according to Jason Baker, partner in the retail brokerage firm of Baker Katz. Baker served as the key note speaker at a real estate forum luncheon sponsored jointly by the International and Greater Sharpstown Management Districts in early October.
“We feel like things are improving,” Baker said. He noted that in the last three to four years, there were many store closings. He said today new store openings equal store closings, which may not be the most positive news but is definitely a step in the right direction.
Other insights on the local retail market noted by Baker include:
• The impact of online sales: in 2011, over 24 percent of retail sales were online, a substantial increase when compared to 2.4 percent in 2007.
• The increase in online sales is impacting the footprint of brick and mortar stores, with every segment shrinking in square footage except grocery stores. “We are seeing a tremendous revolution in the grocery business,” he said, noting the new Trader Joe’s location and HEB’s expansion plans.
• Are malls a thing of the past? Katz cited some statistics on consumers making fewer visits and spending less time but spending more in today’s malls. He said there will be fewer viable malls, with the Galleria a definite exception, and that malls will be trying to add new entertainment type retailers to attract more consumers.
• “Many retailers are struggling nationwide but doing well in Houston,” he said.
• Baker also commented on Sharpstown Mall’s lack of re-development success, saying it hasn’t changed too much in the last 12 months. Based on the surrounding area’s demographics – population, education and traffic counts – “the mall should be working.” He said,”in a city as diverse as Houston, retailers will soon figure it out.”