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<\/p>\nSure,\u00a0location still matters.<\/p>\n
But Houston retail experts\u00a0assert that creating successful mixed-use projects increasingly depends on something a little less concrete: a\u00a0reason to stick around.<\/p>\n
<\/p>\n
\n Bisnow\n <\/p>\n
\n Read King’s Guillo Machado, Tenon Property Co.’s Jason Ford, Midway’s Kevin Freels, The Mint National Bank’s Jeffrey Worstell, Evergreen Commercial Realty’s Lilly Golden and Dhanani Private Equity Group’s Nikhil Dhanani\n <\/p>\n
Panelists at Bisnow’s Houston Retail & Mixed Use Summit, held July 22 at The Westin Houston, Memorial City, said developers are facing higher construction costs and more selective underwriting than they did before. But they also said projects that combine strong fundamentals with thoughtful placemaking continue to attract investment, tenants and customers.<\/p>\n
Midway<\/a> Executive Vice President Kevin Freels said\u00a0his firm’s redevelopment of Central Park Post Oak, the former Post Oak Central office campus, is an example of how retail has become a catalyst for the rest of a mixed-use project.\u00a0<\/p>\n “What we’re trying to create here, or really make people understand, is people are leasing environments; they’re not necessarily leasing buildings,” he said.<\/p>\n After implementing a retail strategy featuring destination restaurants, Midway has increased asking office rents from roughly $22 per SF to $35 per SF, with one pending lease approaching a $40 per SF triple-net rate\u00a0despite the property’s mostly Class-B office inventory.\u00a0<\/p>\n “Even if you have a C building, but it’s in an A-plus location, some people will look past that for the right convenience and walkability on the ground floor,” Freels added.<\/p>\n But how to make a property a destination doesn’t come with a set recipe.<\/p>\n “I think the mistake that so many people are making in development is that we’re trying to please everybody,” said Carly Catalana,\u00a0Southern Land Co.<\/a> senior vice\u00a0president and\u00a0co-head of\u00a0marketing. “No one wants that. That’s cookie-cutter. You have to decide what the specific purpose of your project is, what role it plays in the customer’s life, and lean into that.”<\/p>\n That process begins with understanding the community before leasing tenants or designing public spaces, Rebel Retail Advisors\u00a0founder and President\u00a0Lacee Jacobs<\/a>\u00a0said.<\/p>\n “What differentiates and creates a true mixed-use destination is the experience, and it’s the pedestrian experience,”\u00a0TBG Partners<\/a>\u00a0principal Blake Coleman said. “It’s a place that you want to linger and spend time.”<\/p>\n Successful projects often include a “third place” that gives visitors a reason to gather before shopping or dining, according to Gin Design Group\u00a0founder and Creative Director\u00a0Gin Braverman<\/a>.<\/p>\n \n Bisnow\n <\/p>\n \n Forthea’s Greg Cox, Rebees’ Matt Ragan, Southern Land Co.’s Carly Catalana, TBG Partners’ Blake Coleman, Rebel Retail Advisors’ Lacee Jacobs and Gin Design Group’s Gin Braverman\n <\/p>\n Higher development costs have changed how developers look at new opportunities. When they have to shell out $50 or $60 per SF in\u00a0tenant improvement allowances,\u00a0developers\u00a0are going to be choosier about where and what they build, Dhanani Private Equity Group President Nikhil Dhanani said.\u00a0<\/p>\n Strong\u00a0grocery<\/a>\u00a0anchors continue to make those economics work, according to Read King Vice President of Development Guillo Machado. The firm’s\u00a0H-E-B<\/a>-anchored projects at The Groves, City Park and Katy Park not only supported\u00a0other\u00a0retail leasing\u00a0but also created opportunities to build adjacent multifamily developments.<\/p>\n<\/p>\n