The city known for horizontal expansion might be the most flexible in the U.S. when it comes to investment in CRE. Houston is the largest American city without zoning regulations. High-rises can crop up next to single-family homes, or on lots previously occupied by industrial facilities, with little or no red tape. In the past, the market for single-family homes in Houston pushed development away from the urban core. Developers several years ago were purchasing tracts of land over 1,000 acres to build master planned communities in suburbs like The Woodlands. Large land purchases outside of the Inner Loop have slowed, and interest has moved toward higher-density construction closer to Houston’s center. Residential developers have shifted their focus to lots ranging from 10 to 15 acres, with utilities and entitlements already in place. City officials have added benefits to sweeten the deal, offering $15K/unit for building multifamily Downtown.

In Houston’s East End, land development possibilities are transforming a sparse area on the edge of Downtown into an up-and-coming hub for residential and commercial activity. The addition of a four-mile light rail line and the $7M in pedestrian improvements underway will help attract development to the neighborhood’s 16 square miles of empty or underused industrial land. But Downtown has some competition for higher-density development. As the local government pushes for increased density, investors can leverage the ability to transform less popular asset classes into those that are in demand, thanks to the city’s laissez-faire approach to land use. The breadth and flexibility of city zoning has allowed areas outside of Loop 610 to develop mixed-use “town centers.” Suburbs like The Woodlands and Sugar Land, 20 and 30 miles from Downtown, respectively, advertise walkable urban amenities. CityCentre, an upscale development in Memorial City, advertises a live/work/play experience 14 miles west of Downtown. “Higher density tends to happen around the centers of employment,” said Todd Mason, an Avison Young principal specializing in industrial, land and investment sales. “So you have Downtown, but there are other areas in the suburbs that are starting to pop up. Developments like Sugar Land Town Square and Market Street in the Woodlands, a town center area with several big office moves, like Exxon.” Regardless of location, the flexibility offered by Houston’s lack of zoning is good news for land investors. They will never be locked into one asset class on their land. “In a zoned community, once you have your product on the ground, it is a barrier to entry for the next guy,” Mason said. “There really isn’t a barrier in Houston.”


Without those barriers, development can happen at a much faster rate. A site can go from greenfield to finished product in under 18 months, instead of the three years it would take in highly regulated cities like New York or Los Angeles. Property type conversions can happen just as fast and with limited restrictions. “That is the distinction in Houston,” Mason said. “For land investors it is a little less risky because if apartments are hot right now, you can sell into the multifamily market. If apartments are down and office buildings are hot, you can sell to office developers or retail developers. A developer is not limited by artificial regulations that may have nothing to do with demand.” Institutional investors have caught on to the possibilities and lower risk in Houston. City officials have to make urban density worth their participation, but given the ease of development, it should not be that difficult. “With less cost to entitlement, and fewer political entanglements, developers can bring their product to the market much faster and cheaper,” Mason said.

For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or visit our web site at: Thank you for your interest.

Ed A. Ayres
Houston Realty Advisors, Inc.

Please follow me on Twitter at, my blog at

By the time August rolls around, there will be about 350 fewer J.C. Penney, Macy’s, Sears and Kmart stores at retail shopping centers across the U.S.

For some of those properties, the loss of these stores could be the final blow that puts them out of business. Yet in other instances, the vacancies will provide landlords an opportunity to reinvent the space for more in-demand tenants — allowing them to charge a higher rent, to boot.

From growing retail chains to dining and entertainment, here are some of the tenants who are filling in malls’ empty anchor space, according to a new report by JLL.

Yard House
Started in Long Beach, California, back in 1996, Yard House is known for its massive draft beer selection. The restaurant has roughly 70 locations. As part of its expansion, the company has leased space in a former Sears location at the King of Prussia mall near Philadelphia. It opened last month.










As seen with Yard House, dining at the mall is no longer limited to a dowdy food court. New York hot spot Nobu is bringing its latest high-end sushi joint to a former Saks Fifth Avenue location at The Galleria in Houston. It is scheduled to open this fall.

Once limited to open-air shopping centers, grocers like Wegmans have slowly been creeping into vacant  retail and mall spaces. The frequent visits grocery stores generate make them attractive to landlords, and shoppers benefit by being able to consolidate their trips. Wegmans will take over a former J.C. Penney store at Boston’s Natick Mall in 2018.

Punch Bowl Social
As consumers spend more of their discretionary income on experiences, landlords are increasingly recruiting tenants who provide some form of entertainment. Punch Bowl Social is an adult gaming center that brings billiards, darts and bowling together with food and cocktails. Punch Bowl opened in a former Nordstrom space at Indianapolis’ Circle Centre Retail Mall last year.


Dave & Buster’s
Dave & Buster’s is another entertainment concept infusing a dose of fun in America’s malls. It has opened three locations in former Sears stores, according to JLL.

The fun isn’t limited to adults. KidZania, a recreational learning center that lets children roleplay as a firefighter or chef, will open its first U.S. location next year. Making its debut at the Stonebriar Centre in Frisco, Texas, KidZania will fill a custom new space.



Though a large chunk of vacant space is being filled by nontraditional tenants, up-and-coming retailers are also stepping in. Irish fast-fashion chain Primark is one example, having taken up a portion of the space formerly occupied by Sears at several Northeast malls.


Ulta’s expansion plan will bring 100 more of its beauty shops to the U.S. this year. This fall, it will take over a portion of a former Sears at College Mall, in Bloomington, Indiana.

For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or visit our web site at:  Thank you for your interest.

Houston Retail Shopper

Houston retail is on the rise. New research from CBRE shows discount retailers and high-end shopping centers continue to strengthen their balance sheets as both financially strained, and financially savvy, customers alter their shopping habits. It is a classic Barbell Effect. The Barbell Effect occurs when technological innovations, shifting demographics and changing shopping patterns disrupt ingrained business practices of a specific industry. Those companies that fail to adapt end up contracting into the center of the barbell. Companies that are able to pivot successfully in this new landscape move toward the ends, where there is ample room to expand. Close to 6,000 discount stores opened throughout the U.S. from 2010 to 2015, with sales increasing from $30.4B to $45.3B, according to research firm Conlumino. This 50% growth rate easily outpaced the 17% in overall retail sales during the same period.


At the other end of the barbell, top-tier shopping centers are continually expanding their tenant mix, locking in major players. In Houston, Simon has recently expanded the Houston Galleria with a two-story, 198K SF Saks Fifth Avenue flagship store opened in 2016. Additions include 35 luxury retailers. In Fort Worth, Simon and Cassco Development are close to opening Phase 1 of the Shops at Clearfork, boasting 380K SF of luxury and specialty retail.

Malls are not going extinct, but they are changing. Retailers who are able and willing to adapt quickly will gain greater market share and be able to keep their doors open indefinitely, CBRE reports.


For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or visit our web site at: Thank you for your interest.

Ed A. Ayres
Houston Realty Advisors, Inc.

Please follow me on Twitter at, my blog at

Houston-based Whitestone REIT (NYSE: WSR) announced April 19 it plans to buy Blvd Place, a mixed-use development in Houston’s Galleria area, and build an additional phase.

The real estate investment trust also announced it would buy Eldorado Plaza in the Dallas area in a separate transaction. Combined, Whitestone is spending $204.6 million on the two deals, which are expected to close in May.

Blvd Place is a Class A lifestyle center with 216,944 square feet of leasable space in the Galleria area.  Whitestone also acquired approximately 1.43 acres of developable land, where the REIT will build another phase of the development.

Blvd Phase II-B will be a six-story, 137,000-square-foot building, including 46,000 square feet of retail space on the first two floors and 91,000 square feet of office space on the top four floors. Whitestone expects the project to cost $45 million, but information about the construction timeline was not included in the announcement.

Houston-based Wulfe & Co. developed the first two phases of Blvd Place along Post Oak Boulevard near the southwest corner of the San Felipe Street intersection near the Galleria.  The second phase — which includes a Whole Foods Market and the regional headquarters for Frost Bank — opened in 2014 and won the Houston Business Journal’s 2015 Landmark Award in the Mixed-Use Project category.

In 2012, Houston-based Apache Corp. (NYSE: APA) bought 6.4 acres in between the first two phases of Blvd Place. That deal was a finalist for a 2013 Landmark Award, but the company has yet to begin developing the land. In 2015, permits were approved for the company’s new tower, but Apache later extended its nearby lease through December 2019.

In late 2015, CEO Ed Wulfe told the HBJ he hoped to kick off the third phase of Blvd Place, which was was expected to be two levels of retail and four levels of office. That phase was expected to be behind the existing buildings along Post Oak in the Galleria area.

The existing Blvd Place development is 99 percent leased in the galleria area. Whitestone plans to fund a portion of the acquisition with $80 million of asset-level mortgage financing. However, the REIT is still negotiating terms with potential lenders and does not have any binding commitment letter or definitive loan documents yet.

Also on April 19, Whitestone announced a public offering of 8.1 million common shares, which is related to the Blvd Place and Eldorado Plaza deals. The proceeds will allow Whitestone’s operating partnership to repay a portion of the debt under the REIT’s unsecured revolving credit facility, which then will be available to fund a portion of the deals.

The underwriters will have a 30-day option to purchase up to an additional 1.2 million shares. SunTrust Robinson Humphrey Inc. is the book-running manager of the offering. BMO Capital Markets and JMP Securities are also acting as book-running managers. Wunderlich Securities, J.J.B. Hilliard, W.L. Lyons LLC, Janney Montgomery Scott, Ladenburg Thalmann and Maxim Group LLC are acting as co-managers for the offering.

Eldorado Plaza is in McKinney, Texas, and contains 221,577 square feet of leasable space. Whitestone has the option to purchase an additional 1.86 acres of developable land, where the REIT could build 24,000 square feet of additional space in the Galleria. Eldorado Plaza is 97 percent leased.

Houston-based Hines announced March 30 it acquired the Underwood Distribution Center, an industrial park in La Porte, from BlackRock for an undisclosed amount.

The Class A park currently has five buildings totaling 2.2 million feet, which are 100 percent leased, and three development parcels. Current tenants include CRC, DNow, GIS, Northern Safety, Packwell, PolyOne and others, according to a statement from Hines.

Hines will rebrand the park as Independence Logistics Park and begin developing Building 6. The 167,000-square-foot front-load distribution building is expected to be complete in the fourth quarter of this year.

Randy Baird, Judd Clements and Jim Foreman of Cushman Wakefield represented BlackRock. Hines has renewed the leasing assignment for the park with Billy Gold, Gray Gilbert and Jeff Everist at CBRE.

With the acquisition of the park near the Port of Houston, Hines now has industrial parks in three corners of Houston. The developer broke ground on Beltway Southwest Business Park in 2015 and opened the southwest Houston park in 2016. A few years earlier, Hines partnered with New York-based investment firm Kohlberg Kravis Roberts & Company LP (NYSE: KKR) and Houston-based Pinto Realty Partners to develop Pinto Business Park in northwest Houston.

“We have been targeting the southeast market for some time, and this opportunity presented a good match for our recently expanded industrial investment platform,” Palmer Letzerich, Hines senior managing director, said in a press release. “We are excited to anchor our presence in the submarket with this large scale distribution park. Now rebranded as Independence Logistics Park, we look forward to putting our Hines brand of stewardship and management on the park and expanding with our new building and working with the CBRE team on leasing.”

For more information regarding this property contact Houston Realty Advisor’s to get a fair quote on this property today.