CCIM Retail Luncheon


Speakers: Jason Baker – Baker Katz; Alan Hassenflu-Fidelis; Jeff Read-Read King

Takeaway: Houston is having unparalleled population growth and there is pent-up demand for more retail, which is enjoying its best times ever.

  •  Since retail developments are usually 75% land and 25% building, land prices have a huge impact on viability of a retail project
  • Now that multi-family development is slowing, escalation of land prices should slow as well, benefitting retail growth
  • Many retailers who pushed the limits on how big a box they could build are now coming into smaller markets with smaller boxes…they are ‘compressing’
  • The big three grocers-Kroger, H.E.B., and WalMart-are in a battle for market share, and between them they control about 75% of Houston’s grocery business
  • There will be some smaller specialty grocers falling by the wayside
  • Despite oil price worries, retailers are very profitable at the moment
  • Our great infrastructure here and our business-friendly climate and lack of zoning are big plusses for developers
  • We are seeing huge movement of medical services into retail centers, and they can pay some of the highest rents
  • There is no comparison to the Oil Depression of the ‘80s with regard to Houston’s economy, which remains strong
  • Online shopping accounts for perhaps 6 or 7% of retail sales, project in three years to perhaps reach 9%…still relatively small and little threat to ‘brick and mortar’ locations
  • Some online retailers are actually building their first brick and mortar stores, while brick and mortar retailers are ramping up their online operations

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