Press

October 17 , 2007

Lenders, brokers and developers discuss retail trends throughout Texas’ major markets

Lenders, brokers and developers discuss retail trends throughout Texas’ major markets

October, 2007 - Shopping Center Business

Big Developments Underway In The Lone Star State

Interviews by Stephen O’Kane

Texas is experiencing a boost in jobs and population, which is creating opportunities for retailers and developers. Mixed-use and lifestyle developments lead the current trends in the state, while other retail continues to remain strong. Shopping Center Business interviewed brokers, developers and lenders across the state to discuss the current retail trends.

Interviewees included: Dan Watson, Archon Group; Eric DeJernett, CB Richard Ellis; Steve Triolet, CB Richard Ellis; Tim Young, KeyBank Real Estate Capital; Victor Melton, LMI Capital; Brad Bailey, Marcus & Millichap; Jerry D. Goldstein, Marcus & Millichap; Gar Herring, TheMGHerring Group; Kimberly Gatley, NAI REOC Partners; H. Dean Lane, NewQuest Properties; Tom Kier, Opus West; Edward Page, Page & Partners; Stephannie Mower, PM Realty Group; Alan Warren, Q10|Kinghorn, Driver, Hough & Company; Stuart Wernick, Quantum First Capital; Steve Zimmerman, The Retail Connection; Chuck Siegal, Rohde Ottmers Siegal Commercial & Investment Realtors; Mark Reeder, Staubach Retail; Jim Lemos, Texas Realty Capital; John Morran, Texas Realty Capital; Woody Mann, Jr., Vista Equities Group; G. Peter Jacob, Weaver, Davis & Jacob Realty Group; David Nicolson, The Weitzman Group.

San Antonio

SCB: Can you give our readers an overview of the San Antonio retail market?

Nicolson: San Antonio’s retail market continues to report a notable balance of supply and demand for retail real estate, thanks to retailer demand for space and construction with strong pre-leasing. Currently, the overall retail market reports an occupancy rate of 91 percent, making San Antonio the strongest retail market in Texas, based on occupancy. Our occupancy rate is based on a retail market inventory of approximately 29 million square feet.

The market is experiencing notable activity from new and existing retailers opening or about to open in 2007. These include Costco, which is under way with an approximately 180,000-square-foot store at Interstate 35 and Olympia Parkway in Selma;            SuperTarget at The Village at Stone Oak located at Highway 281 and Stone Oak; Wal-Mart Supercenter, which opened a 200,000-square-foot-plus store at 11210 Potranco;  Lowe’s Home Improvement Warehouse, which opened a store in January at The Rim; JCPenney, which opened a new department store location in North Star Mall in August; and H-E-B, the market’s Number 1 grocer, which will expand an approximately 75,000-square-foot store at Loop 1604 and Blanco Road into a 142,000-square-foot H-E-B Plus! store by year-end. H-E-B also opened a new H-E-B Plus! at Loop 1604 and Potranco. The Plus stores, which average about 150,000 square feet and combine groceries with general merchandise, are also planned for Marbach Road and at the site of the former McCreless Mall.

Siegal: The retail market remains fairly stable in the Texas market, however there are signs of tougher times ahead. It has become increasingly difficult and time consuming to finalize leases for national or strong regional tenants, particularly for anchor and junior anchor tenants. Concessions to the tenants on rent, TIA and rent commencement dates are extremely negotiable and the ranks of these strong tenants needed to make the development successful and attract smaller tenants are rising. Part of this due to the fact that the number of these tenants has decreased significantly and they often control the ability to get financing, as the lenders have become more difficult to work with. We are reaching the period of time in many leases in developments approaching the end of their lease terms. Although many of these leases have options with fixed terms, the sales of the retailers do not justify the rentals and NNN expenses during their primary term, and the options call for increases. NNN expenses, particularly property taxes, have had significant increase during the past 4 to 5 years. You therefore see many tenants asking for decreases to renew their lease rather than pay the increases required during their options. Many of the smaller retailers will fail.

SCB: Where is the majority of retail development taking place? Why?

Nicolson: San Antonio is in the midst of an extremely active retail construction market.  By year-end 2007, the market should report new construction that roughly equals the 2.2 million square feet that came online in 2006. An equivalent amount is expected for 2008, based on the projects in the works or under construction for 2008 openings.

Currently, one of the biggest areas for development can be found along San Antonio’s major thoroughfares, most notably Loop 1604. Major projects along the Loop include the newest phase of The Rim, located at Interstate 10 and Loop 1604, across from The Shops at La Cantera mall. During 2006, 673,500 square feet opened in The Rim, and the project is set to have 2 million square feet upon completion. The Rim continues to add retail and restaurants, and in early 2008, Life Time Fitness will open a 150,000-square-foot health club. In addition, The Village at The Rim, a planned 300,000-square-foot specialty retail mixed-use project, will also be a part of The Rim project. Also along the Loop is Hill Country Plaza, a 350,000-square-foot center set to open this fall at Loop 1604 and Northwest Military Highway. The center will feature a 77,000-square-foot Academy Sports & Outdoors. Another major project along Loop 1604 planned for 2008 or later include Alamo Ranch, located at the southwest quadrant of Loop 1604 and Culebra, which is expected to have 900,000 square feet upon completion. The project, designed to have three major anchors and 10 junior anchors, is under way for a summer 2008 opening. Retailers already signed include Lowe’s Home Improvement Warehouse, Target, JCPenney, Best Buy, Dick’s Sporting Goods, OfficeMax, PetSmart, Ross Dress For Less and Marshalls. Also, there is a large mixed-use project at the southeast corner of I-10 and Loop 1604, which is designed to incorporate 300,000 square feet of retail space, 1 million square feet of office space, hotels and multifamily uses. Phase I of the project is set to start construction in early 2008.

Gatley: The Far West sector has emerged as the newest hot spot, and residential development has triggered a substantial amount of retail development. The intersection of Loop 1604 and Potranco has experienced tremendous growth. A 200,319-square-foot Wal-Mart Supercenter located just outside Loop 1604 along Potranco Road opened this quarter joining the new H-E-B Plus! center completed last year and Potranco Village, a 18,058-square-foot center that came on line in the first quarter. Nearing completion is the 46,110-square-foot Madison’s Market and a new free-standing Kohl’s store. More development is planned including Lowe’s Improvement Warehouse, Academy and the 100,000-square-foot Granada Station featuring an 18-screen theater.

SCB: Do you have any retail projects underway or planned?

Nicolson: Weitzman’s sister company, Cencor Realty Services, has several projects in the works, including Lockhill Village, which I mentioned before. A couple of Cencor’s projects are expansions, including the expansion of Culebra Market, a project anchored by H-E-B at the southeast corner of Loop 1604 and Culebra Road. The expansion, to be complete this year, is adding retailers such as Office Depot. Another expansion involves the Village at Forum Parkway, a center at the northwest quadrant of I-35 and Loop 1604 that features Ethan Allen, Bassett Furniture Direct and Chuck E. Cheese’s. The center is being expanded for Circuit City and Office Depot. Another project, which is just being completed, is Four Oaks Plaza, at the intersection of FM 3009 and I-35. The center features 30,000 square feet of multi-tenant retail, as well as three pad sites, and is peripheral to a new Wal-Mart Supercenter. Cencor also is underway with a mall-peripheral retail center, Ingram Heights, a 25,000-square-foot project anchored by David’s Bridal. Ingram Heights is located at Loop 410 and Roxbury.

SCB: How is the investment climate in and around San Antonio?

Warren: The retail investment climate remains healthy because of the overall strength of the local commercial real estate market. The San Antonio retail markets now measures more than 100 million square feet of space with an overall vacancy rate of only 7 percent. Fueling this demand for retail product are stellar demographic trends, including population growth more than double the national average over the past year. According to Property & Portfolio Research (PPR), this rapid pace of growth is forecast to continue through 2011. Retail construction remains robust in San Antonio, with over 6 million square feet scheduled to be completed in 2007. Sales activity has been strong with more than 30 major transactions reported during the past 12 months at a median price of $174 per square foot. The median cap rate for trades over this same period (where data was available) was 7 percent.

Gatley: Investment activity within the retail sector has slowed compared to previous years, not for lack of interest or capital but for lack of product on the market. Recent investment activity included the purchase of the 29,243-square-foot Potranco Road Shopping Center by Houston-based Richland Investments from Option 1 Realty Group. Other sales included Bandera Trails, a 29,552-square-foot property, the 26,515-square-foot Oak Ridge Square Shopping Center, Parkwood Place, a 52,790-square-foot center, the 37,248-square-foot Cadillac Plaza and Habitat for Humanity bought the 20,000 square-foot retail building at 1350 Southwest Military from The Christian Door Ministries.

Houston

SCB: What are the current trends in retail development in Houston?

Mann: The most prevailing trend underway seems to be that of mixed-use lifestyle developments. Although the term lifestyle has been abused, true mixed-use lifestyle developments that combine various disciplines, such as retail, office, and/or residential are where major developers seem to be focusing their efforts — both in suburban and urban in-fill locations as well. 

Lane: The Texas retail market is strong, and it’s getting stronger. Increased new home sales paired with the substantial job growth are directly affecting the population, which is creating more demand for retail.

SCB: Where is the majority of retail development taking place in Houston?

Page: Regions such as far West Houston, The Woodlands in North Houston, Pearland in South Houston and League City in Southeast Houston have increased development following the residential growth in these areas. Additionally, within Beltway 8, we are seeing primarily multi-use projects being developed in infill areas catering to existing underserved markets.

Goldstein: Given our population growth of approximately 150,000 residents per year, developers are building in most of Houston’s suburban and urban population centers.  There has been a lot of focus on the Pearland market recently. CBL & Associates Properties is currently developing the 1.2 million-square-foot Pearland Town Center at Texas 288 and FM 518. This mixed-use development is going to be anchored by Dillard’s, Macy’s and Barnes & Noble, and CBL recently announced that other tenants will include GNC, Chico’s, White House|Black Market and Ann Taylor Loft, among several other prominent national tenants. This is very impressive because Pearland was at best a Wal-Mart-type suburban market with Target considered upscale about 5 years ago.

Mower: Mixed-use is the primary in-town development due to the density of population and scarcity of available land. Developers are looking more to improve infill locations with stronger retail and focusing on strong demographics.  

SCB: Do you have any retail projects underway or planned?

Jacob: Yes. One of our current projects is The Crossing at Telfair. We will break ground in September on Phase I of this project called Bonaventure Plaza. The Crossing at Telfair is a 112-acre mixed-use commercial development project in Sugar Land consisting of office, medical, retail, restaurants and a hotel. 

Also, Sienna Village is a new retail development at Highway 6 and Sienna Parkway in Missouri City that will feature 90,000 square feet of retail including five pad sites for banks, shops and restaurants, and a new 113,771-square-foot H-E-B Plus! that will open in late 2008.

Oyster Creek Crossing is a 16-acre tract of land on State Highway 6 and Trammel-Fresno. This mixed-use development will serve several communities including Sienna Plantation and will be a great fit for single-business end-users such as service establishments, banks and quick-service restaurants.

The Crossing at Sienna Ranch, located on Sienna Parkway, just South of Hwy 6, will feature both office and retail space including a 15,000-square-foot retail center.

Rocky Creek Crossing is an 8-acre retail development consisting of retail and restaurants. The Offices at Rocky Creek Crossing were recently completed making the two projects a dynamic mixed-use development.

LaCenterra at Cinco Ranch is a 260,000-square-foot mixed-use, town center development in West Houston/Katy.

Page: From the regional mall category, both The Grand and Pearland Town Center have been added to the mix, as well as the latest outlet mall for our market, Houston Premium Outlets. We are also seeing new power centers such Fairfield Place Town Center and the center at Westheimer and Dairy Ashford. LaCenterra at Cinco Ranch Phase II and the expansion of Market Street, both lifestyle centers with leasing underway, continue to gain momentum. Mixed-use projects in store for Houston include CityCentre, High Street, Boulevard Place, River Oaks District, West Ave., Regent Square and Sonoma.

Mann: We have just completed Phase I of LaCenterra at Cinco Ranch which is a 260,000-square-foot mixed-use, town center development in the West Houston/Katy area that contains 170,000 square feet of specialty retail and restaurant space and 90,000 square feet of Class A office space. Construction on Phase II of LaCenterra began last month, and will contain an additional 150,000 square feet of specialty retail and restaurant space along with 250 Class A residential units.

In addition, we are beginning construction this fall on the infrastructure for The Reserve at Grand Parkway, which is an 89-acre mixed-use development on the Grand Parkway in Houston that will contain medical, office, residential, and retail/restaurant space.

SCB: Who are the active retail developers in the Houston market?

Goldstein: The usual suspect developers — Trademark Development Company, Wulfe & Company, The Ainbinder Company, Fidelis and MetroNational — continue to be active here with top-tier developments. In addition, however, less active players in Houston’s development market are making big waves. For example, GID Urban Development Group is moving forward with its planned Regent Square on the soon-to-be former Allen House site on a prominent 20-acre site fronting Allen Parkway near River Oaks.

Page: NewQuest Properties, CBL & Associates Properties, Gulf Coast Commercial Group, Read King Commercial Real Estate, Simon Property Group, Property Commerce and Chelsea are the first that come to mind.

SCB: Are you seeing more big boxes or smaller tenants coming into your market?  Are there any new retailers entering the market?

Page: Among the big box retailers, Staples, Dick’s Sporting Goods and HomeGoods all plan to enter the Houston market. Various new restaurants have plans here as well, including Houlihan’s, Celebrity Bakery, The Counter, Baker Bros American Deli, FatBurger and Eddie V’s Edgewater Grille. To add to their existing locations, la Madeleine anticipates several additional stores. Specialty retailers including lululemon athletica, Crazy 8, Sweet & Sassy and Sprinkles Cupcakes have also made the decision to come to Houston.

SCB: What is the retail lending climate in Houston and how does it compare with the other Texas markets? Nationally? 

Melton: Retail lending in the Houston area has been rather strong at this point in time.  This is a direct reflection of the strong energy market, population growth and our impressive job market. The Houston area continues to experience growth from its suburbs, especially The Woodlands, Sugar Land, Katy, and Pearland. I would rank Houston as the top market in Texas for retail lending, with the San Antonio area as being a stable second. The Dallas/Fort Worth area and Austin are probably not as strong, but they certainly have submarkets with excellent performance taking place.

Dallas/Fort Worth

SCB: Where does retail stand today in Dallas/Fort Worth?

Reeder: The Dallas/Fort Worth retail market has continued to see growth into 2007.  Currently there is over 11 million square feet of retail under construction, with the largest project being the Village at Fairview in Allen with more than 2 million square feet of retail. One of the big reasons the Dallas/Fort Worth retail remains strong is due to the increase in job growth. Dallas/Fort Worth ranks first in annual job growth amongst the MSA across the nation, producing more than 90,000 jobs in the area with over 20,000 of those jobs being in professional services. There are 21 active malls in the Metroplex with Northpark Mall being the largest at 1.9 million gross leaseable square feet. Some of the active retailers in the market include Target, Lowe’s Home Improvement Warehouse, Dick’s Sporting Goods, Belk, Wachovia, JCPenney, Toys “R” Us/Babies “R” Us, Staples, Kohl’s, T.J. Maxx, Marshalls and Ross Dress For Less.

SCB: What are the current trends in retail development in Dallas/Fort Worth?

Zimmerman: The trend toward urbanism continues with several mixed-use lifestyle centers being announced. Developments such as the 275,000-square-foot Lake Highlands Town Center, which will also include 1,600 residential units, and The Glen at Preston Hollow, a 175,000 square foot center, which will include 1,200 apartment units, and more than $1 million homes) are located in the well-established Dallas neighborhoods of Lake Highlands and Preston Hollow. These developments combine hard and soft goods, specialty retail, dining and entertainment, and in many cases both residential and office — giving the consumer the opportunity to have it all while completely revitalizing areas that have been overlooked for years.

Herring: There is a clear trend toward upscale lifestyle centers and true mixed-use developments, instead of the indoor mall that we all grew up with.  We are also starting to see mixed-use developed on a grander scale. True mixed-use development is becoming a regional destination in excess of 1 million square feet that combines retail, hotel, movie theaters and even event centers. 

Triolet: Several retailers are decreasing their footprint on new locations. More traditional big box retailers like Best Buy, Circuit City and Bed Bath & Beyond are opening smaller locations with lower operating costs. This trend is really just beginning here locally, but I think it will become more common over the next few years.

SCB: Where is the majority of retail development taking place? Why?

Zimmerman: The Dallas/Fort Worth Metroplex is truly a 360-degree market with growth in every direction fueled by a steady supply of reasonably priced homes, job growth and improved highway infrastructure through state-funded improvements. Examples to the south include The Retail Connection’s/Connected Development Services’ 155,000-square-foot Mansfield Pointe development. Projects to the east include the recently opened Bass Pro Shop on Lake Ray Hubbard and Woodmont’s 400,000-square-foot development in Rockwall. Several projects have been announced to the west including The Retail Connection’s/Connected Development Services’ 385,000-square-foot Weatherford Ridge development and their 800,000-square-foot Arlington Highlands Shopping Center. As always, the growth north remains strong with projects such as MGHerring’s two developments totaling 1.5 million square feet at the southeast and northeast corners of US 75 and Stacy Road. Additional development to the north along Hwy 380 includes Lincoln Properties development on Preston Road and General Growth Properties’ development on the tollway. All of the above mentioned projects are supported with strong anchor tenants further validating the strength of each trade area.

Herring: In Dallas/Fort Worth, we are currently experiencing a great deal of new development in the suburban areas. Just north of Dallas, areas such as Allen and Fairview are seeing a boom in retail development, continuing the trend toward strong residential growth and easy access to major highway systems. There is also strong growth in Cedar Hill, located in southern Dallas County. We will open an 800,000-square-foot lifestyle center in Cedar Hill in March 2008.

SCB: Do you have any retail projects underway or planned?

Zimmerman: In addition to the urban and suburban projects I already described, other developments include Allegiance Development’s 400-acre master-planned project called Rayzor Ranch in Denton, which will ultimately include approximately 2 million square feet of retail. Weber and Company has several Target-anchored centers including those located at US 380 and US 75 in McKinney; Wheatland and I-20 in Dallas; the southwest corner of the Dallas North Tollway and Eldorado Parkway in Frisco; and the southeast corner of Highway 360 and Camp Wisdom in Grand Prairie.

Watson: We are currently under development with Alamo Ranch containing 960,000 square feet of retail, and are just finishing development of Prestonwood Town Center with 280,000 square feet. We also have four potential projects, each with 400,000 to 600,000 square feet planned that may be underway in the next 12 months.

Herring: Yes. We currently have more than 4 million square of retail under development, including three projects in the Dallas area.

Uptown Village at Cedar Hill is an 800,000-square-foot lifestyle center anchored by Dillard’s and Barnes & Noble. It is the first upscale, open-air lifestyle center in Cedar Hill. Opening date is March 12, 2008.

The Village at Fairview is a mixed-use development anchored by Dillard’s, Macy’s and JCPenney that will feature more than 1 million square feet of retail. In addition to the anchors, the project includes tenants Barnes & Noble and The Container Store; 500,000 square feet of specialty retail and restaurants; 200,000 square feet of office space; more than 1,000 multifamily residential units; Village Roadshow Gold Class Cinema; and a 280-room Embassy Suites Hotel with an adjoining 80,000-square-foot convention center.

The Village at Allen is a mixed-use development in Allen that includes a 900,000-square-foot power center.

The Village at Allen is a mixed-use development that includes a 900,000-square-foot power center. The project features 1 million square feet of retail including big box tenants, specialty shops and restaurants. It also includes 500,000 square feet of office space, the 7,500-seat Allen Event Center and a 225-room Courtyard by Marriott Hotel.

The Village at Fairview and The Village at Allen are being developed as one project, located at Stacy Road and Highway 75 in Fairview and Allen. Both will open in October 2008. Upon completion, the 400-acre mixed-use development will feature more than 2 million square feet of retail and 1 million square feet of office, residential and hotel space.

SCB: Are you seeing more big boxes or smaller tenants coming into your market? Are there any new retailers entering the market?

Zimmerman: The Dallas/ Fort Worth market continues to be one of the premiere retail markets in the United States with retailers of all sizes, categories and concepts entering and expanding through the market, capitalizing on the strong consumer spending. New retailers entering the market include Splitsville Lanes, a high-end bowling concept out of Florida; ALDI Stores, a discount supermarket chain based in Germany; Sports Club LA, a fitness club; Robin Bros. Jewelers, a full-service jewelry store; BLT Steakhouse, a high-end steakhouse based in New York City; and Kenichi, a contemporary Asian cuisine restaurant.

Triolet: Our market has a constant churn of retailers that have entered and exited the market in recent years. Mervyn’s and Gabberts, for example, pulled out of North Texas, while IKEA, The Dump and others have moved in. The retail industry is very dynamic; there’s always someone closing up shop, while new concepts take their place. That’s one of the many things I like about tracking the retail market, the evolution of the marketplace is very exciting to me.

SCB: What is the retail lending climate in your area and how does it compare with the other Texas markets? Nationally?

Young: The lending environment remains very strong and competitive despite the current turmoil in the capital markets. In today’s environment, lenders are expecting solid pre-leasing and there is less reliance on letters of interest (LOI). According to retail developers, big box retailers are continuing to move into or expand in the Dallas/Fort Worth market, as well as other major Texas markets such as Austin, San Antonio and Houston.

Wernick: The retail lending climate in Texas is still active with respect to new developments or for assets that are in the reposition mode. Many of the banks that have been competing with their mini-permanent products after construction are now being sought after because the conventionally conduit lenders who historically have taken the banks out after the construction period are sitting on the sidelines. Additionally, in the permanent market the life companies are showing resurgence as well. However, they are quickly getting tapped out due to funding allocation and are showing signs of quality selectiveness.

Austin

SCB: Can you give our readers an overview of the Austin retail market?

Hill Country Galleria in Austin is expected to add 1.1 million square feet of retail space to inventory by year-end.

Bailey: Another year of favorable demographic and economic outlooks has generated elevated construction activity in the Austin metro thus far in 2007, with a record 4.6 million square feet of new retail space expected to come on line before year-end. Although the influx of new space is expected to push vacancy up in the near term, strong household and employment growth is forecast to render the decrease in occupancy levels temporary. Expected average household growth of 3.2 percent over the next 5 years and employment growth of 3.8 percent this year will help support healthy retail spending in 2007, attracting national retailers with an eye on expansion to the metro. In the Central/Downtown Austin submarket, the much-anticipated Hill Country Galleria is expected to add 1.1 million square feet of retail space to inventory by year-end. In addition, The Domain, a 760,000-square foot mixed-use project, is attracting high-end retailers to the development.

SCB: What are the current trends in retail development in Austin?

DeJernett: Current trends include mixed-use developments like the recent one from Opus Corporation in the Village of Bee Cave where multifamily, theater, lifestyle, department store and subsequent office product all exist within the development. Where Austin once had only a handful of retail nodes, now we have several emerging edge cities coming out of the ground. Developments such as the Domain, anchored by a Simon Property Group lifestyle development as well as an IBM Campus, and the Village of Bee Cave are prime examples. Another emerging trend is the first leg of the Capital Metro Commuter Rail Line scheduled to open in the fall of 2008. Projects are being planned for development around transit stops from downtown Austin to Leander and are providing various retail opportunities.

SCB: Do you have any retail projects underway or planned?

Kier: Hill Country Galleria in Bee Cave is a 1.1 million-square-foot mixed-use lifestyle project, which includes 770,000 square feet of retail; 220,000 square feet of multifamily residential; 40,000 square feet of townhouse residential; and 150,000 square feet of office space. The retail portion is anchored by Dillard’s, Cinemark Theatres, Barnes & Noble, Circuit City and Dick’s Sporting Goods. Other tenants include Aeropostale, Ann Taylor, Ann Taylor Loft, Banana Republic, Bath & Body Works, Chico’s, Cold Water Creek, Eddie Bauer, Finish Line, Hollister, Jos A. Bank, Journey, Limited Too, LensCrafters, New York & Co, Talbot’s, Victoria Secret, White House|Black Market, Zale’s Jewelers, Kay Jewelers, Walgreens and Mimi’s Café.

DeJernett: CBRE is actively involved in the development of a mixed-use transit oriented development at Crestview Station in Central Austin. We are also involved in the early stages of developments in the North and Northwest submarkets of Austin.

SCB: What is the retail lending climate in your area and how does it compare with the other Texas markets? Nationally?

Lemos and Morran: The Austin market continues to perform well above all Texas markets in terms of job and employment growth, market potential and, as a result, receives very high marks and unlimited investment focus from national lenders. In all respects, Austin is and projected to remain a top five market nationally in all lending categories.

SCB: How is the investment climate in and around your area?

Lemos and Morran: Investors at local, regional and national levels all have Austin in their top five markets for acquisitions of retail and other asset classes due to Austin’s strong growth prospects and market performance. The big question today is:  If other markets around the country slow down due to the changes in the capital markets will the Texas markets be able to continue to buck the trend and maintain this level of transaction activity? With reports of more than two-thirds of the investment sales activity since 2004 coming from sources outside Texas, it would be hard not to expect some decrease in activity. Our forecast is that the impact on the institutional, core-type assets will be significantly less than on the smaller, more speculative properties.

STEVENS RANCH TOWN CENTER TO BREAK GROUND IN 2008

Weingarten Realty and Cumberland 211 are creating Stevens Ranch Town Center, a proposed 1.1 million-square-foot development in San Antonio, which is scheduled to break ground next year.

Weingarten Realty and Cumberland 211 are teaming up to bring a large-scale retail project online in 2010. Scheduled to break ground next year is Stevens Ranch Town Center, a proposed 1.1 million-square-foot development located at the northeast corner of Potranco Road and Highway 211 in West San Antonio.

Stevens Ranch Town Center will be a part of a 2,500-acre master-planned community, which will feature, restaurants, custom homes, multifamily space and medical space. Its convenient location hopes to provide a shopping and dining destination for surrounding residents and workers.

“Stevens Ranch Town Center is conveniently located to many of the San Antonio’s employment centers including the 4,500 acre Westover Hills, a major business employment center, Toyota, Microsoft, World Savings, Chase Bank, Citicorp, South Texas Medical Center and others are located,” says Cyndee Smith, regional leasing director for Weingarten Realty. “There are approximately 100,000 employees within a 15-minute drive of Stevens Ranch.”

Using this location, Steven Ranch Town Center hopes to attract a dedicated customer base to its 1.1 million square feet of retail. The town center will be the retail hub for West San Antonio as it is located off of Potranco, a major east/west corridor in the city that connects to San Antonio’s commercial districts.

“The community will be pleased to have quality retail stores in close proximity to their homes,” says Smith. “There has been significant interest from numerous big box tenants for a number of years to enter this market at the right time, which has finally arrived.”

— Stephen O’Kane


AMREIT REALTY INVESTMENT CORP. TO DEVELOP LAS FUENTES PLAZA

AmREIT Realty Investment Corp. is developing Las Fuentes Plaza, a 23.14-acre retail center located in McAllen, Texas.

Taking root at 10th and Dove streets in McAllen, Texas, is Las Fuentes Plaza, a retail development of AmREIT Realty Investment Corporation. The project, which began construction in the fall of last year, has opened a portion of its retail space, with plans to deliver the remaining space in the spring of next year.

Anchoring the 23.14-acre Las Fuentes Plaza is an upscale Lowe’s Home Improvement Warehouse, which incorporates into its design certain architectural elements unique to The Valley region of the state. The store, along with a few retail pads, opened earlier this year. AmREIT Realty Investment Corporation also plans to bring additional retailers and restaurants to Las Fuentes Plaza next spring.

Construction has begun on Phase II of the project, which will develop additional retail pads. According to AmREIT, portions of the second phase have been leased before construction has finished. The company is attracting new restaurant concepts that are unique to McAllen and, upon completion, will offer a blend of national retailers with local shops and restaurants to create an inviting destination for residents and visitors alike.

Also involved with AmREIT’s Las Fuentes Plaza is project architect Levinson Architects and construction manager AmREIT Construction Company. El Pistolon II owns the project.           

— Stephen O’Kane


THE PLAZA AT ROCKWALL TO OPEN THIS FALL

Scheduled to open this fall and throughout the first quarter of next year is The Plaza at Rockwall, a retail development of Fort Worth, Texas-based The Woodmont Company in Rockwall. The regional shopping center hopes to attract families in Rockwall and the surrounding areas.

The Plaza at Rockwall, which is located on the southwest quadrant of Interstate 30 and Highway 205, will blend large-scale power center attributes with the familiar feel of a specialty center, giving it a wider appeal. Upon completion, the development will offer approximately 475,000 square feet of retail space.

The Woodmont Company is familiar with this area as it has developed the adjacent 225,000-square-foot retail property, Rockwall Crossing. The company had an opportunity to acquire land next door to Rockwall Crossing and develop it into a larger center offering Rockwall residents more of the tenants they wanted.

The Plaza at Rockwall was designed by Architecture+ and CNLRS Rockwall, a Texas-based partnership, owns the development.

— Stephen O’Kane


HOUSTON-BASED DEVELOPER BRINGS BOUTIQUE LIFESTYLE CENTER TO KATY, TEXAS

The Villago, a mixed-use lifestyle center of Marcel Inc. in Katy, Texas, is scheduled to come on line in December.

Houston-based Marcel Inc. is bringing a new boutique mixed-use lifestyle center to Katy this year. The Villagio, located at the northeast corner of Westheimer Parkway and Peek, will span a total 112,285 square feet when it celebrates its grand opening in December.

The Villagio will offer 77,468 square feet of retail and restaurant space. The project is already more than 65 percent leased to 17 prospective tenants that include Berryhill Baja Grill, Azzarelli’s Italian Restaurant, French Bakery, Japanese Steak and Sushi Bar, Buffalo Wings and Rings, Ya Ya’s Clothing, Gina’s Accessories, Salon De Vero, Bookworm and Rosenburg Jewelers.

In addition to the large retail portion, the approximately 12-acre development will house 33,041 square feet of office space and a four-level paring garage. Prospective office tenants for The Villagio include Cinco Family Dentistry, Cinco Travel and Network Funding Mortgage. There also are nearly 4 acres positioned directly behind the project that remain available for possible residential or office developments.

The Villagio represents a new direction for Marcel Inc., as its past projects solely included single-use build-to-suit projects or renovations. The $22 million development is company’s first venture into mixed-use projects. While Marcel Inc. plans to build similar boutique developments in the future, the company will continue with smaller land acquisitions.

— Stephen O’Kane