HOUSTON – (Realty News Report) – Retail space inside the Inner Loop is in short supply. According to NAI Partners, only about 70,000 square feet of Inner Loop retail space is currently vacant.
“There’s been a clear shift toward the Inner Loop,” says Jason Gaines, who leads the retail division at NAI Partners. Average Inner Loop rents are approximately $42 per square foot.
Overall, Houston’s retail center market is performing well, with rising rents, solid absorption and a vacancy rate near 5.5 percent.
Still, uncertainty looms as national chains close locations amid growing competition from e-commerce, Gaines notes. Many national retailers are also reducing their store sizes.
For example, Hobby Lobby once typically operated 40,000-square-foot stores; the chain now seeks roughly 22,000-square-foot locations, Gaines says. Numerous retailers are downsizing their physical footprints.
Traditional regional malls, which once dominated retail with anchors such as Sears and J.C. Penney, are reinventing themselves and being converted to new uses.
“We are converting our properties from traditional, apparel-focused enclosed malls into dominant suburban town centers with a more diverse tenant mix,” said Stephen Lebovitz, CEO of CBL Properties, which owns major retail centers in 26 states, including Pearland Town Center.
CBL, a Chattanooga-based REIT, has seen forty anchor stores close across its mall portfolio. The New York Stock Exchange recently announced plans to delist CBL’s stock after its share price fell below $1. CBL said it intends to remedy the situation with a reverse split to raise the stock price.
CBL is addressing the loss of traditional anchors by redeveloping those large spaces and introducing entertainment venues, fitness centers and other complementary uses. “With the 40 anchor closures we’ve recently experienced, it’s critical that replacements are in place as soon as possible to stabilize properties and reverse negative revenue trends,” Lebovitz told shareholders.
To replace anchors, CBL is diversifying its centers by adding entertainment, value-oriented retail, multifamily housing, hotels, office space and grocery stores, creating a broader range of experiences for visitors.
CBL reports that 24 of the 40 former anchor spaces are either committed or under construction, including eight already open and six more scheduled to open before year-end.
“The progress of our anchor-replacement program demonstrates the strong demand we’re seeing at our properties,” said Lebovitz, a former national chairman of the International Council of Shopping Centers. “Our plan to transform enclosed malls into suburban town centers is becoming a reality.”
CBL’s Pearland Town Center sits on 110 acres at Highway 288 and FM 518. Anchored by Dillard’s and Macy’s, it contains 644,920 square feet of gross leasable area. CBL’s stock closed at $0.83 per share on Tuesday.
Sept. 4, 2019 Realty News Report Copyright 2019
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