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In his annual retail forefor the greater Houston area, Ed Wulfe projected only 950,000 square feet of new retail space will be completed and opened this year, the smallest amount in 20 years.
His projection represents a 69 percent decline from the 3.1 million square feet completed last year.
“Development as we have come to know it has not only become much more difficult, but has for all practical purposes disappeared,” Wulfe said at the annual ForeLuncheon sponsored by O'Connor & Associates, a real estate research and support services firm.
Wulfe, president of Wulfe & Co. a Houston-based commercial real estate brokerage, development and property management firm, said a number of forces are working against the local retail market, including the recession, the credit crunch, a rise in unemployment and a halt in expansion among many national chains.
Wulfe predicted that by the fourth quarter of 2010, there will be a shortage of good retail space in quality anchored locations throughout the city and foreslightly improved occupancy and rental rates by the end of the year.
Multitenant retail building occupancy is down sightly at 83.2 percent, he reported.
Among the few major anchors scheduled to open in the area this year are H-E-B, Rooms to Go, Walmart and Kroger, Wulfe said.
The parts of town that remain relatively strong for retail are inside the Loop, the Galleria/Uptown, The Woodlands, Sugar Land, Katy, Baybrook and Clear Lake areas, Wulfe said.
Super regional malls, including the Galleria, Memorial City, Willowbrook, Baybrook, First Colony and Woodlands malls, will continue to see strong business, he said. However, developers will face challenges with some older malls that have closed department stores or high vacancy rates, including PlazAmericas, formerly known as Sharpstown Center; West Oaks; Mainland Mall; Pasadena Town Center; and Greenspoint.
On a more optimistic note, Wulfe said that Houston's economy is still better than much of the nation's. He noted a new Forbes magazine report showing that Houston ranks fourth on a list of cities in which the recession is easing.
“We have proven to be capable of withstanding economic pressures because we have one of the lowest costs of living in the country,” he said. “People are still moving here after a loss of a job or whatever in other areas because of the potential for growth and opportunity.”
Wulfe said he sees an end in sight as far as a halt in expansion among chains.
“National retailers are once again in the Houston market looking at locations,” he said.
Last year, Wulfe fore2.9 million square feet of retail space would be completed in 2009, which would have been a 53 percent decline from 2008. He came close to the actual 3.1 million square feet.
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