Q3 2009 Houston Retail Market Report

8/14/2019 Q3 2009 Houston Retail Market Report

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HOUSTON RETAIL THIRD QUARTER 2009

Retail MarketMARKET RESEARCH | THIRD QUARTER | 2009

HOUSTON

Our Knowledgeis your Pro


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COLLIERS INTERNATIONAL | HOUSTON

eta ar et

Houston Retail Neighborhood Centers Lead Market

MARKET RESEARCH | THIRD QUARTER | 2009

Houstons retail market continued to record weak fundamentals through the third qua

2009 with net absorption, occupancy and rental rates falling below levels posted at this t

last year. Certain retail categories, however, performed better than others under the curr

economic stress test. Neighborhood centers led the market with year-to-date positive

absorption of 875,062 sq. ft. through the third quarter, while all other retail catego

posted less than 200,000 sq. ft. of net gains in occupied space. Among the most signific

decreases in year-to-date negative net absorption were single-tenant retail properties wMARKET INDICATORS

Q3-08 Q3-09

Quarterly Net Absorption

826,360 SF 447,965 SF

Overall NNN Rental Rate

328,422 sq. t., o owe y community centers wit 203,343 sq. t. an ma s wit 160,sq. ft. With tough economic conditions pummeling consumers, neighborhood centers

likely continue to be counted among the most resilient retail categories through 2010.

As retailers continue to strategically position themselves to increase market share and

over increasingly value-conscious consumers, the local retail sector is experiencing

aggressive pricing war among key grocers led by Cincinnati-based Kroger and San Anto

based H.E.B. Not to be left out Randalls Food Markets ac uired b Pleasanton Califor. ps . ps

Overall Vacancy

9.7% 10.3%

Year-to-date Deliveries

1.9 Million SF

based Safeway in 1999) has announced plans this year to significantly reduce prices a

attempts to rebrand itself from a high-end grocer to a more moderately priced store.

Looking forward, Houstons retail market is expected to remain soft with the lo

employment sector not likely to improve before the end of 2010. In the twelve monending in August 2009, Houston job losses totaled 95,100 or negative 3.6% job grow

With few benchmarks available to measure what has come to be commonly referred to as

Under Construction

1.4 Million SF

OB GROWTH & UNEMPLOYMENT

Great Recession, t e uration o t e current economic s ow own remains t e piv

question in considering the outlook for the commercial real estate sector. Major challen

facing the overall market remain constrained credit, mounting job losses, and weak consu

spending. The interconnection of these key economic factors supports what many bel

will be a slow recovery for both the overall U.S. economy and the retail sector.

ABSORPTION, NEW SUPPLY & VACANCY RATES

8%

9%

10%

11%

0

500,000

1,000,000

1,500,000

2,000,000

, ,

OUSTON -3.6% Job Growth95,100 jobs lost

nemployment 5.2% 8.4%

XAS -2.8% Job Growth

295,400 jobs lost


ug- ug-

6%

7%

-1,000,000

-500,000

3Q-08 4Q-08 1Q-09 2Q-09 3Q-09

Absorption New Supply Vacancy

COLLIERS INTERNATIONAL

www.collierstexa

S. -4.4% Job Growth

6,047,000 jobs lost



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Occupancy& Availability

Absorption & Demand

product types combined slipped 60

basis points to 89.7 percent in the third

quarter 2009, down from 90.3 percent

at this time last year. This marked thefifth consecutive quarter since the

third quarter 2008 that occupancy

has decreased for the overall market.

positive net absorption of 447,965

ft. in the third quarter, an improvem

from the negative net absorption in

second quarter. An overall slowdowntenant demand for retail space w

reflected in the year-to-date positive

absorption of 629,357 sq. ft., far be

y proper y ype, severa ca egor esmaintained occupancy levels above the

90 percent mark, while still recording

significant year-over-year decreases.

Lifestyle centers open-air markets that

in Houston have typically catered to a

more affluent consumer reported

occupancy down 200 basis points to

e . m on s . . o a sorp

gains recorded through the th

quarter last year.

Year-to-date gains in occupied sp

were led by neighborhood centers w

positive net absorption of 875,062

ft. In contrast, three key categorTar et

YTD 2009 RETAIL LEASES

op eta ease

Lunar Golf, Brazos Mall

Southeast Submarket

. percent n t e t r quarter, rom

93.8 percent at this time last year.

Power and community centers also

posted lower occupancy at 92.7 percent

(from 95.4 percent) and 86.2 percent

(from 88.1 percent), respectively.

Notably, only two categories outlets

recor e signi icant osses in occup

space through the third quar

including community centers 203,3

sq. ft., single-tenants 328,422 sq.

and malls 160,815 sq. ft., all

negative net absorption.

Major retail tenant move-ins in

Pearland Parkway VillageMay-09 133,055 SF

JC Penney

Teas Crossing

Jan-09 104,175 SF

and neighborhood centers recorded

slight occupancy increases to 97.9

percent (up 120 basis points) and 87.4

percent (up 50 basis points) from one

year ago. With consumers spending

expected to remain low while local job

losses continue to weigh down the

economy, discount retail and grocery-

third quarter contributing to the ove

positive net absorption includ

Gerlands Food Towns 52,580 sq.

lease at El Dorado Shopping Cen

(Clear Lake); Sports Authoritys 42,0

sq. ft. lease at Pearland Town Cen

(Pearland); Barnes & Nobles 35,0

sq. ft. lease at River Oaks Shopp

Lunar Golf

Brazos Mall

Sep-09 58,800 SF

Gerlands Food Town

El Dorado Shopping Center

Apr-09 52,580 SF

anchored centers may continue to lead

the market through next year.

Rental Rates

Houstons overall retail rental rate at

$15.79 per sq. ft. NNN in the third

uarter held stead from the revious

Center (Midtown); Gallery Furnitu

22,500 sq. ft. lease at 9524 Westheim

(Westheimer) and Specs Liquors a

Fine Foods 20,047 sq. ft. lease at 4

FM 762 (Rosenberg).

Leasing

Dustin Mounts

Post Oak Center

Mar-09 47,136 SF

Ashcraft European Bakery

Quail Creek Center

Feb-09 45,000 SF

quarter, but fell 2.5 percent from one

year ago. Key product types postedlarger decreases on a year-over-year, led

by community centers down 6.4

percent to $17.03 per sq. ft. NNN

(from $18.20), and power centers down

4.8 percent to $19.70 per sq. ft. NNN

Houstons retail leasing activity reach

1.5 million sq. ft. in the third quarthe highest quarterly total this ye

Weak activity in the first half of 20

kept the year-to-date total of 3.7 mill

sq. ft. significantly below the 5.1 mill

sq. ft. recorded through the th

uarter last ear as tenants a

RandallsPalmer Plaza

Jan-09 35,182 SF

Family Thrift Center

Sharpstown Plaza

May-09 33,862 SF . .

centers also posted rate decreases to

$15.42 per sq. ft. NNN (down 2.0

percent) and at $13.50 per sq. ft. NNN

(down 1.7 percent).

consumers struggle through a slugg

economy marred by negative

growth. See the column at left fo

select list of 2009 retail leases.


Dynamic Fitness

Shadow Creek Ranch Town Center

Jul-09 33,700 SF


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Development Activity Select Projects Delivered YTD 2009 and Under Construction

CityCentre, bldgs. 1-2, 13 (left)

800 Town & Country Village

270,899 Sq. Ft. - 87.7% Leased

Est. Delivery: December 2009Developer: Midway Company

v ace r g

3 & 4 Boulevard Place

205,000 Sq. Ft. - 3.0% Leased

Est. Delivery: 2010-2011

Developer: Wulfe & Company

River Oaks Shopping Center

2030 West Gray Street61,172 Sq. Ft. - 60.7% Leased

Delivered: August 2009

Kirby Commons

7929 Kirby Drive38,156 Sq. Ft. - 52.4% Leased

Delivered: June 2009

eve oper: e ngarten ea ty eve oper: mmons e er

Victory Lakes Town Center Waterside MarketPlace


2620-2850 Gulf Freeway

170,252 Sq. Ft. - 62.6% Leased

Delivered: February 2009

Developer: NewQuest Properties

Grand Parkway at Mason Road

147,917 Sq. Ft. - 97.6% Leased

Delivered: May 2009

Developer: Regency Centers


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HOUSTON RETAIL PROJECTS UNDER CONSTRUCTION

Submarket Property Name Address RBA % Leased Developer Name

Estim

De

Memorial East CityCentre, bldgs. 1, 2, 13 800 Town and Country Village 270,899 87.70 Midway Companies N

Galleria Blvd Place 3 & 4 Blvd Place 205,000 2.71 Wulfe & Co. 2010

River Oaks West Ave, bldgs. A,C, D1, D2 Kirby Dr @ Westheimer Rd 195,835 11.60 Urban Partners, Inc. D

Rosenberg Kroger's (Brazos Town Center II) 24400-24502 Commercial Dr 134,200 100 NewQuest NCypress Fairway Point, bldgs. A,B,C,D,E 15103 Mason Rd 80,000 0 Fairfield Village Community J

Cypress Cypress Village Station Skinner Road & Highway 290 79,550 100 NewQuest J

Lake Jackson Brazosport Village 410-426 Plantation Dr 56,102 95.37 Chainlinks Retail Advisors

Washington Boulevard Washington Centre 4601 Washington Ave 47,922 47.73 Washington 4600 Ltd D

Sugar Land Kensington Commons 16305 Kensington Dr 33,800 0 Shah Companies D

South Katy Best Buy (Shops at Bella Terra) Grand Parkway & Westpark Tollwa 30,067 100 Moody Rambin D

Baytown Eastchase Shopping Center Eastchase St & Garth Rd 30,000 0 Moseley Commercial Real Estate J

Hobby 12941 Gulf Freeway Center 12941 Gulf Fwy 24,831 71.81 Jacob White Construction J

Washington Boulevard 3939 Washington 3939 Washington Ave 22,800 0 Apex Group D

Sugar Land Lake Pointe at Sugar Land 1611 Hwy 6 22,590 0 The Mody Group Ltd. J

Clear Lake Laurel Bay Center FM 2094 @ Lighthouse Blvd 22,400 70.98 The Retail Connection D

Clear Lake 161 North Highway 35 Center 161 North Highway 35 20,466 100 Off Corner Texas Ltd. J

Hobby Cullen Commons II 12805 Cullen Blvd 20,000 42.5 Cullen Commons D

Cypress Coles Crossing Shopping Center III Spring Cypress 19,880 16.93 Interra Properties D

Spring Louetta North Retail Center 1614 Louetta Rd 18,000 16.39 ORR Commercial N

Stafford-Missouri City 12615 South Gessner Retail 12615 S Gessner Rd 15,000 100 Seyed Deen J

HOUSTON RETAIL DELIVERIES YEAR-TO-DATE 2009

North Katy Walgreens (Katy Main Street) 25620 Pin Oak Rd 14,820 100 Woodcreek Development/BPI Realty D

Stafford-Missouri City The Shoppes at Sienna Plantation Highway 6 & Sienna Parkway 13,115 0 Prosperity Investments M

Rosenberg Cracker Barrel (Brazos Town Center II) 23801 South West Fwy 10,300 100 NewQuest N

Total retail under construction in projects listed above 1,387,577

Grand total retail under construction (including projects not listed) 1,440,157

Submarket Property Name Address RBA % Leased Developer Built

Clear Lake Victory Lakes Town Center 2620-2850 Gulf Freeway S 170,252 62.58 NewQuest F

South Katy Waterside Marketplace Grand Parkway & Mason Rd 147,917 97.60 Regency Centers M

Pearland Target (Pearland Parkway Village) 8503 N. Sam Houston Parkway 133,055 92.18 Plaza at Pearland Village Ltd. M

Jersey Village LA Fitness 9246 W. Sam Houston Parkway 128,033 100 Hong Du American Investment SEast Kingwood West Lake Crossing 7510 W Lake Houston Pkwy 78,085 100 Atascocita Commons Ltd. M

Memorial West BP Childcare Center 540 Westlake Park Blvd 74,708 100 Westlake LP J

Midtown River Oaks Shopping Center 2030 West Gray Street 61,152 60.70 Weingarten Realty A

, .

Pearland Parks At Boulder Creek 15055 Pearland Pkwy 48,400 66.94 JEFCO Development Corp F

Tomball Sears Home Appliance (Tomball Marketplace) 14512 FM 2920 43,332 25.20 Weingarten Realty J

Spring Sawdust Shopping Center 525 Sawdust Rd 40,000 100 DMA MC Investments F

West University Kirby Commons 7929 Kirby Dr 38,156 52.83 Simmons Vedder & Company J

Cypress Cypress Village Station 25282 Northwest Freeway 35,317 100 NewQuest S

Rosenberg Grand Parkway & Hwy 59 19875 59 Hwy 35,214 25.70 KM Realty Advisors F

Pearland Shadow Creek Centre 11901 Shadow Creek Pkwy 35,000 48.60 First Brazoria Capital Funding J

River Oaks Greenway Commons 3830 Richmond Ave 34,848 54.70 Trammell Crow Company M

Northwest Former Tuscan Garden Oaks 835 34th St 33,250 100 Titus, Inc. J

Pasadena Deer Park Center 4200 Pasadena Blvd 30,074 0 Smithco Development J

Pearland Shadow Creek Marketplace Shadow Creek Pkwy & Hwy 2 29,545 0 Gulf Coast Commercial Group J

Tomball Saddlebrook Plaza 25201 Kuykendahl 28,000 0 Sumkin Development M

Friendswood Friendswood Park Plaza 907 S Friendswood Dr 27,000 77.41 Crystal Creek Developers JTomball Tomball Marketplace - Shops F 14223 FM 2920 26,880 0 Weingarten Realty J

La Porte Brittany Plaza 1610 Brittany Bay Blvd 24,000 77.10 Wulfe & Co. F

The Woodlands Market Street at The Woodlands 9595 Six Pines Road 24,000 2.50 Kimco Realty S

Rosenberg Goldshire Plaza 0 FM 1640 Rd 23,010 100 Simron Properties LLP F

Northwest North Houston Rosslyn Retail 8511 N Houston Rosslyn Rd 22,000 100 Afie & Ben Investments F

Memorial West 14520 Briar Forest Retail Center 14520 Briar Forest Drive 22,000 63.40 Thybach Builders J

Memorial East CityCentre, bldg. 9 800 Town and Country Village 21,000 100 Midway Companies J

Alief Apple Dentists 13194 Bellaire Blvd 20,500 100 Elevia Inc. F

Fall Creek Park Lakes Landing, bldg. C 4801 Wilson Rd 20,102 83.00 Read King Commercial J


The Woodlands Technology Plaza at Research Forest 4223 Research Forest Dr 20,000 37.00 The Woodlands Land Development J

North Katy PetSmart (Shops at Bella Terra) Grand Parkway & Westpark Tollwa 20,000 100 Moody Rambin S

Total retail projects delivered year-to-date listed above 1,728,522

Grand total retail projects delivered year-to-date including those not listed above 1,920,174


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22 Canada17 Latin America

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on 6 Continents

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COLLIERS INTERNATIONA

1300 Post Oak Blvd, 2nd Floo

Houston, Texas 7705

Main: 713.222.21

Fax: 713.830.21

www.collierstexas.co


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Q3 2009 Houston Retail Market Report