HOUSTON – (By Michelle Leigh Smith, Realty News Report) – As retail continues to evolve, the growing habit of spending more time at home promises to shape a very interesting holiday shopping season.
Retail trends were a major focus at the recent NAI Partners press event in Houston.
Retail – Jason Gaines: “More than half the country is under 40, and people have changed how they consume food, media and nearly everything else,” said Jason Gaines, NAI Partners Senior Vice President and Retail Team Leader.
Gaines shared his observations at the NAI Partners briefing earlier this week.
“People are rethinking how they spend time. I spoke with a boutique movie‑theater client who hasn’t yet entered the Houston market and they’re experimenting with new ways to integrate food and beverage. Some national operators are adapting better than others. More consumers are streaming at home. Dining out has slowed and more people are cooking at home. The trend is toward eating in—colleagues are having lunch delivered or ordering juices to their offices.
“The 7,500‑square‑foot retail boxes that were popular in the 1990s aren’t attractive investments today,” Gaines added. “I recently leased a 9,600‑square‑foot former Champs Sports near Willowbrook, which will become a BBQ buffet. It looks like even a wave of kale juice bars won’t come between Texans and their love of barbecue.”
Initially there were concerns that some retailers would struggle after Hurricane Harvey, but Gaines reports that, for many especially publicly traded retailers, business models remain resilient. “My clients are pleasantly surprised at how well their concepts continue to perform. Rents reflect current operating costs. We are completing more leases at roughly $45 per square foot all‑in. Grocery space activity has slowed,” he said.
Gaines expects more grocers to adopt two‑story formats similar to H‑E‑B’s model in San Antonio, which is soon to appear in Bellaire as well. If H‑E‑B moves into Meyerland Plaza as anticipated, that project would also be a two‑level build‑out. Meyerland developer Fidelis Realty is awaiting final confirmation from H‑E‑B communications before making a formal announcement, Gaines noted.
He also sees e‑commerce as a significant force reshaping retail. According to U.S. Department of Commerce figures, national e‑commerce sales reached roughly $395 billion in 2016, a 15.6% increase from 2015. That rapid growth has compelled retailers to prioritize fast, reliable movement of goods from distribution centers to customers—examples include Amazon Prime’s accelerated delivery windows and major traditional retailers ramping up their fulfillment capabilities to compete.
Austin – Dan Boyles: Under Partner Dan Boyles, NAI’s Austin office reported rising leasing activity. Approximately 1.1 million square feet of industrial space is under construction in Austin, with a significant portion available for lease. The Southeast submarket—benefitting from improved infrastructure, proximity to the airport and convenient access to San Antonio and Houston—delivered the most warehouse and distribution product in 2017, totaling 713,670 square feet.
Veggie Noodle Company is preparing to begin distributing organic vegetables from a converted chip‑manufacturing facility in East Austin into a new 41,000‑square‑foot factory. Local reports indicate this will be the second‑largest food manufacturing site in Central Texas after Michael Angelo’s frozen Italian food plant in North Austin.
The Austin economy continued to expand at a measured pace in August. The seasonally adjusted unemployment rate was 3.1% in August, slightly up from 3.0% in July. Construction led job growth, while manufacturing accelerated overall despite some weakness in computer and electronics production employment.
Investment – Andrew Pappas: NAI Partners’ Fund II is progressing with participation from a group of high‑net‑worth investors, including some long‑standing relationships. “Our fund platform is structured for high‑net‑worth individuals who want to invest in real estate alongside a full‑service brokerage and management firm,” said Andrew Pappas, Senior Vice President of the NAI Investment Fund.
“NAI Partners invests its own capital alongside the fund in every acquisition, which we believe demonstrates strong alignment,” Pappas added. “With a $100,000 minimum investment, our program offers access to value‑add real estate opportunities. Leveraging the firm’s resources and proprietary data, we aim to grow this program over time.”
“We are not targeting institutional Class‑A properties,” he explained. “Our focus is middle‑market office, industrial and retail assets in the $6–$15 million range that have current cash flow and clear value‑add potential. After creating value through capital improvements and proactive asset management, we typically divest when returns are maximized for investors. The usual holding period is three to five years.”
Leasing – Jon Silberman: On the office side, Managing Partner Jon Silberman described the market as divided between employees who want to work near where they live—seeking live‑work‑play environments—and those who continue to commute to traditional job centers like the energy corridor.
“There’s a lot of debate right now,” Silberman said, reflecting on patterns he’s seen throughout his career. “The cycle shifts, and now you also have coworking operators like WeWork occupying space that would traditionally be leased by companies. WeWork can be more expensive than traditional office space and represents a niche. Competitors such as Regus are attempting to respond, and it’s unrealistic to expect all industries—such as oil and gas—to suddenly migrate entirely to that model.”
Silberman combines analytical rigor with creative problem solving. Rather than defaulting to “that can’t be done,” he looks for solutions and often finds ways to make challenging projects work.