March 19, 2024 – CenterSquare Investment Management, in a joint venture with PAGEWOOD has acquired Gateway Industrial Commons, a 621,000 sf Service Industrial Portfolio located in the Northwest Submarket of Houston, TX. Comprised of 46 buildings spanning 9 properties, the Portfolio caters to a diverse array of service-oriented tenants and accommodates users of various sizes, with spaces ranging from 1,000-30,000 sf. Properties within the Portfolio feature 14’-15’ clear heights and an average office buildout of 19%. The Portfolio spans the Southern Brittmoore and Lower 290 corridors of Houston and is easily accessible via several major throughways including I-10, Beltway 8 and Highway 290.

This investment speaks to CenterSquare’s continued confidence in the Service Industrial sector, which remains ripe with potential opportunities for consolidation, optimization and long-term growth. These flexible spaces are tailored to ensure both versatility and accessibility and are equipped to meet the needs of a diverse array of tenants. New Service Industrial inventory remains limited, due to both high barriers to entry and rising construction costs, positioning sector fundamentals to remain favorable for the foreseeable future.

CenterSquare and PAGEWOOD intend to address deferred maintenance and make a range of capital improvements throughout the properties including concrete repairs, metal framing upgrades, new signage, painting building exteriors and executing make-ready tenant improvements. Additional property improvements, such as adding LED lighting and replacing HVAC with ecofriendly coolant, will be completed to ensure the Portfolio’s sustainability. With improved aesthetics and institutional management of operations, the Portfolio will be positioned to significantly increase the in-place rental rates to align with prevailing market rates and drive meaningful growth of net operating income.

“The acquisition of Gateway Industrial Commons reflects our unwavering confidence in the limitless opportunities within the Service Industrial sector,” stated Victoria Madrid, Vice President of Private Real Estate at CenterSquare. “Given the scarcity of new developments and rising costs of construction, this Portfolio is well positioned for success amidst prevailing market conditions. In collaboration with PAGEWOOD, we will enhance both the sustainability and profitability of the Portfolio, driving substantial growth and aligning in-place rental rates to meet market standards.”

“With our success in northwest Houston and the studied data science from our Lighthouse, Gateway Industrial Commons reinforces our commitment to the industrial sector and delivers industrial product at in-demand locations,” said Mat Volz, Managing Principal of PAGEWOOD. “We are excited to partner with CenterSquare on this unique portfolio and are confident it will deliver a dynamic, in-demand industrial product while enhancing the neighborhoods to which they belong.”

Marcus & Millichap brokered the sale and financing of Fountains of Jupiter Apartments, a 108-unit apartment property built in 1986 in Dallas, Texas. 

Al Silva, senior managing director investments, and Ford Braly, first vice president investments, in Marcus & Millichap’s Fort Worth office, had the exclusive listing to market the property on behalf of the owner, a Dallas-based investment group. The buyer, a newly formed partnership also based in Dallas, was procured by Silva and Braly. The property attracted 24 tours and nine offers during a four-week marketing campaign.  

Brandon Brown, senior managing director at Marcus & Millichap Capital Corporation (MMCC), a subsidiary of Marcus & Millichap, procured 7-year agency debt for the buyer featuring a 3-year interest only period. Brown specializes in multifamily capital advisory and has procured billions over his 24-year career. “It is always a pleasure to collaborate with the Silva-Braly Multifamily Team on transactions and find ways to add value.” said Brown.  

Fountains of Jupiter is a 108-unit, individually metered community located at 12993 Jupiter Road. The property is situated along Interstate 635, providing convenient access to area employment centers, shopping, and schools. Built in 1986, the community features well-designed floor plans with washer/dryer equipment, individual HVAC systems, copper wiring, and PVC plumbing. Community amenities include a large swimming pool with a spa, bark park, secure access gates, and garden fountains. Residents also enjoy private patios/balconies, spacious walk-in closets, and brick fireplaces. The new owners plan to improve unit interiors and property management, enhancing Fountains’ competitiveness in the area rental market. 

Since the beginning of 2022, the Fort Worth-based Silva Braly Multifamily Team of Marcus & Millichap has completed the successful marketing and sale of over 35 apartment properties in the Dallas-Fort Worth area totaling more than 6,500 units and $815 million in transaction volume.

Marcus & Millichap closed the sale of Hampton Inn Sulphur Springs, a 70-room hotel property in Sulphur Springs, Texas.  

Skyler Cooper, senior vice president investment in the Dallas office, exclusively marketed the property on behalf of the seller, Cox Hospitality Group, LLC, and procured the buyer, a Texas-based private investor with support from Allan Miller and Chris Gomes of the Miller-Gomes Hotel Team of Marcus & Millichap.  

Hampton Inn Sulphur Springs, located at 1202 Mockingbird Lane, is an upper-midscale hotel built in 2010 on approximately 2.5 acres. The 70-room property features an outdoor pool, fitness and business center, on-site retail, breakfast area, and 600 square feet of meeting space. Visible from Interstate 30, the hotel is near downtown Sulphur Springs, the Hopkins County Museum and Heritage Park and the Southwest Dairy Center & Museum. 

Dallas-based Younger Partners Investments acquired a two-property, 288,063-square-foot retail portfolio in McKinney and Longview, Texas, from developer Weber & Company.  

The addition of these properties brings YPI’s portfolio to over 1 million square feet of retail. The acquisition also marks YPI’s expansion into East Texas while strengthening its existing North Texas holdings.

The 137,287-square-foot 380 Towne Crossing is at 2014 W. University Drive, at the northwest corner of US 75 and SH 380 in McKinney. The center is shadow anchored by Super Target and Lowe’s Home Improvement. The center’s occupancy is 98.2%, with a diverse tenant mix including FedEx Office, Buffalo Wild Wings, Leslie’s Pool, Cook Children’s Pediatrics, Storming Crab, Jimmy John’s and Sleep Experts.

The 95.6%-occupied Longview Towne Crossing consists of 150,775 square feet. Located at 3092 N. Eastman Road at the northeast corner of US 259 and Hawkins Parkway, the property’s anchors are PetSmart, Five Below and Old Navy. Target and Kohl’s serve as the center’s shadow anchors. Other tenants include James Avery, Cowboy Chicken, Sport Clips, Ulta Beauty, Crumbl Cookies, Sleep Number and Lane Bryant.

Image by Pexels from Pixabay

Recent headlines have been filled with bankruptcy announcements, failed mergers and acquisitions and going out of business sales. But the future is expected to be brighter across the retail sector as brands across a variety of industries look to expand.

Closed doors lead to opportunities

In the coming months, tenants like Big Lots, Party City, CVS Pharmacy and Walgreens, among others, will shutter locations across the country, leaving significant vacancies in both the net-lease retail and shopping center markets.

While some of the storefronts are likely to remain vacant for the foreseeable future, opportunistic tenants in growth mode will be quick to identify the most attractive locations and backfill those spaces.

Ollie’s Bargain Outlet, Barnes and Noble, Burlington, Michaels and Haverty’s are among the retail brands that have recently acquired leases as other big box stores go out of business. This strategy has allowed tenants to not only capitalize on high-quality, high-traffic sites, but also solves the challenge of expanding in a low-vacancy market.

As shopping center anchors and big-box retailers continue to explore these opportunities, it’s not quite as easy in the single-tenant net-lease market. Net-lease retailers often have strict construction and branding guidelines, requiring build-to-suit solutions. For example, we wouldn’t see Dutch Bros Coffee explore a former Walgreens property as it looks to identify thousands of new potential locations over the coming years.

Instead, it is more likely that shuttered freestanding and junior box locations will be targeted by tenants with more flexibility, such as independent businesses looking to serve their local consumer base from an upgraded location.

Redevelopment or demolition also becomes an option, especially for sites with good ingress/egress in high-traffic areas. While a vacant CVS Pharmacy won’t solve the physical real estate requirements of a Chick-fil-A, for example, the site itself might justify a tear-down.

2025 and beyond

Over the next several years, thousands of new stores and restaurants are expected to open as retailers look to expand their customer reach.

Quick-service restaurants and convenience stores are among the sectors expanding most aggressively, with Jack In The Box, Slim Chickens, Wawa and Sheetz all targeting massive growth. Discount retailers, like Five Below and Ross Dress For Less, have also announced significant growth plans, as consumers remain cost-conscious. Additionally, retailers that have maintained their footprints in recent years, including Lowe’s and Walmart, have identified now as the time to start growing again.

Will 2025 be a pivotal year for closures and consolidation, or will it instead be a year remembered for substantial growth among established and emerging brands?

Note: Graph above includes a sampling of announced or planned openings and closings beginning in 2025 and may represent long-term plans or estimated counts. Retailers listed twice have announced both significant openings and closings.

Sources: Northmarq Research, various retailer websites, and public news articles; information deemed accurate but not guaranteed, with data gathered in December 2024. Tenants are selected for the Top 100 list based on a combination of factors including but not limited to expansion rate, frequency of investment sale transactions, and brand recognition, and tenants may be added to or removed from future reports; the Top 100 list does not suggest a better or less risky investment.

Lanie Beck is senior director of content and marketing research at Northmarq.

CenterSquare acquired an essential service retail shopping center in Houston.

Windermere Village is a 31,355-square-foot Essential Service Retail (ESR) property located in a prominent retail node at the highway intersection of US290 and FM1960 in Houston.

The center has excellent visibility and benefits from 50,000 cars per day. The property is surrounded by top retailers such as Target, Walmart, Home Depot and Kroger, which combine for over 6 million visitors per year. 

The property features national retailers such as Tropical Smoothie Café, Pure Barre, The Joint Chiropractic, Marco’s Pizza and Edible Arrangements.