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.
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Ed A. Ayres
Houston Realty Advisors, Inc.
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