Houston real estate market still leading the nation, expert tells Real Estate Forum
The Houston real estate market continues to tread above the nation’s turbulent economic waters, an expert told the audience at the annual Real Estate Forum October 3. The luncheon, held at the Kim Son restaurants’ Bellaire Blvd. location, was sponsored by both the Greater Sharpstown (GSMD) and International Management Districts (IMD).
After opening remarks by former Harris County Tax Assessor/Collector Paul Bettencourt and from Management District Chairs Kenneth Li of Sharpstown and Wea Lee of the IMD––both leaders in local real estate––keynote speaker Jason Baker presented a realistic picture of the Houston market, perhaps rosier than the rest of the country climbing out of the recession.
With 11 to 13 new developments about to launch, Houston seems to be holding its own, said Baker, a principal in Baker Katz and one of the city’s leading retail brokers. To understand what’s happening locally, you have to look at what’s happening nationally, he told the crowd.
In the mid 2000s, Houston was developing 5 to 6 million square feet of commercial space, whereas that’s about the same level of development the entire country saw in 2011, he said.
“All of us are affected by what’s going on in retail because we’re all consumers,” said Baker, who also serves on the International Council of Shopping Centers.
As more than 100,000 new residents are added to the Houston market each year, “we need to add about 5 million square feet every year just to keep up,” Baker said. The not-so-good news he shared was that, in June 2012, the number of store closings equaled the number of new store openings.
“We feel like things are improving,” Baker said, “But we’ll never be back to developing 4 to 7 million square feet a year.”
The stall in brick-and-mortar development may due to be the rise of online shopping, Baker told the crowd. In 2011, 86 percent of all people who used a computer ordered something online. In 2007, only 2.4 percent of all retail transactions were completed online. Retailers are anticipating a 17 to 20 percent increase in online sales for the coming holiday season, he added.
Baker said a shopping center with a grocery store as the anchor is the safest environment with the least amount of risk for neighboring retailers.
“We are spoiled rotten with the quality of grocery selections that we have in Houston,” he said. “Where every other segment is shrinking in square footage, the exception is grocery.”
Baker also addressed the question of whether shopping malls have become a concept whose prime time has past. Shoppers are now visiting malls less often, he said––half as often as they did 15 years ago.
View photos from the event below: