As counterintuitive as it may seem, Houston really doesn’t have enough grocery stores.
According to a study by The Food Trust, the Bayou City has fewer grocery stores per capita than most other large cities in the country, with an average of 8.2 supermarkets per 100,000 people. The national average is 11.6 supermarkets.
Ground was broken last June for a new Pyburn’s Farm Fresh Foods grocery store in an area considered a food desert. Pyburn’s owner John Vuong said his family purchased property at 7125 Scott Street in the South Union area of Houston more than nine years ago. Now, with the help of the city of Houston, Pyburn’s will build a grocery store at the site. At that time of the groundbreaking, plans were to open the store in the first quarter.
Nine of Pyburn’s existing 11 locations are in the Houston area.
Houstonians soon will have plenty more choices when it comes to shopping for groceries. Retailers will open 32 new Houston grocery stores this year.
According to Houston-based commercial real estate firm Wulfe & Co., supermarkets will make up 43 percent of the total 3.7 million square feet of retail space expected to be built and opened in 2015. That is the most new retail square footage since 2008.
H-E-B is among grocery companies that are building in Houston and have already opened stores this year. The San Antonio-based chain will open seven stores in the Houston area; three are replacement stores.
On Feb. 18, H-E-B opened a new store on San Felipe Street in the Tanglewood neighborhood. The 90,000-s.f. store features a 14-ft. high, 250-ft. linear living wall with more than 22,000 indigenous species of plants, reports Houston Culture Map. In addition, the store has a spice blending station, tortilleria and a scratch bakery.
The Tanglewood H-E-B also features a restaurant called Table 57, a named derived from the area’s 77057 zip code. The eatery was designed with input from top Houston chef Randy Evans, who appeared on Food Network’s “Kitchen Inferno.” The sit-down restaurant is the first of its kind for H-E-B and features indoor/outdoor dining, cooking classes and wine tastings.
A new 56,000-s.f. H-E-B on Palmer Highway is expected to open this summer. It will replace a Texas City store less than two miles away.
In spring 2016, H-E-B will open in the Clear Lake Marketplace on Clear Lake City Boulevard at El Dorado.
In addition, H-E-B plans to replace its 20,000-s.f. Bellaire store. It may be built at the site of the grocer’s existing store at 5100 Cedar Street.
H-E-B is now hiring for a new Lake Jackson store, which is located at Oyster Creek and Oak drives. It is scheduled to open May 6.
H-E-B’s new Lake Jackson store is slated to open in May.
Meanwhile, Lovett Commercial has acquired Kings Crossing Apartments in Kingwood. The 1980s-era building will be demolished to make way for a new H-E-B store that will replace one currently operating across the street. Construction is expected to begin this summer with the store opening in summer 2016.
Kroger will build four new stores and expand two others. One will be 124,000 s.f. and anchor a new shopping center at FM 1463 and Spring Green Boulevard in Katy when it opens this fall. Another will open at League City and Hobbs Road next spring.
The Ohio-based grocery retailer will open in Valley Ranch in summer 2016 and at Beltway 8 and Westlake Houston in late 2016, the Houston Business Journal reports.
Sprouts Farmers Market will open a store this July at 2718 Old Chocolate Bayou in Pearland.
On March 18, Whole Foods Market opened its new store on Lake Woodlands. The 44,000-s.f. store is located in the Hughes Landing development in The Woodlands.
Whole Foods Market’s 45,000-s.f. Voss store, a relocation of the company’s Woodway store in Houston, will open April 8 at 1407 South Voss Road. At 45,000 s.f., the Voss store is twice the size of the Woodway location.
Houston-based Fiesta Mart opened a new store in Cypress on Jan. 21. It is the company’s 34th in the Houston market.
In February, Trader Joe’s opened a store in the Cinco Ranch area in Katy.
On Feb. 13, Trader Joe’s opened at the La Centerra shopping center in the Cinco Ranch area in Katy. It is the fourth in the market for the German-owned grocery chain.
A new 41,000-s.f. Walmart Neighborhood Market opened in Katy on March 4 at 24919 Westheimer Parkway in the Cinco Ranch area. It is the fourth of the company’s markets to open in the greater Houston area this year.
“With this high activity of new retail growth, we project that higher retail occupancy rate will exceed a seldom-achieved rate of 92 percent this year,” said Wulfe & Co. Chairman and CEO Ed Wulfe. “Retail rental rates will also continue to increase, driven by limited availability of shopping center space, higher land costs and higher construction costs for materials and labor to build or remodel new retail facilities.”
Cinco Ranch Store Manager Tara Lovelady cheers with associates.
Falling oil prices may benefit retailers
With oil prices plummeting, prognosticators and others are trying to determine the impact on Houston’s well being. The Greater Houston Partnership in its March 2015 report said it’s uncertain “how far the rig count, oil prices, drilling activity and energy employment will fall, and what impact their fall will have on Houston’s economy.”
Several Houston-based oil and energy companies have announced layoffs in the thousands. Houston-based Marathon Oil Corp. has said it would cut as many as 400 jobs, the Houston Chronicle reports. Nabors Industries, based in Bermuda with operations in Houston, has cut nearly 3,500 jobs and Houston-based Baker Hughes will cut 7,000 employees worldwide.
Job seekers have flocked to Houston, which had a 4.1 percent unemployment rate in December. The metro area also has a lower cost of living relative to others in the U.S. These factors have resulted in a large and growing population. Houston’s metro-area population is 6.3 million and is expected to increase to 7.4 million by 2020.
This has driven record increases in new home sales and reduced available inventory to just a few months’ supply. Home values increased 12.3 percent in 2014, according to Zillow Inc. It had predicted that Houston would rank No. 1 nationally in homes value appreciation last year, but Miami-Fort Lauderdale and Denver beat it to No. 1 and No. 2, respectively.
Now Zillow expects Houston home values to grow approximately 2.1 percent, which is a dramatic slowdown from the 12.3 percent increase last year, the Houston Business Journal reports.
While it is not yet known exactly how falling oil prices will affect the Bayou City’s housing market, some projects already have lost financial backing, and current conditions could affect nine planned multifamily residential projects in downtown Houston.
There is a bright side. Wulfe & Co. said the recent financial cutbacks in the energy markets are somewhat beneficial to retailers. Lower gas prices have increased consumers’ discretionary income, which in turn is reflected in increased sales for retailers.
In addition, the projected slowdown in construction of multifamily and office development will improve on the availability of construction materials and a workforce for retail projects, which could expedite construction schedules.
The biggest wholesaler in the U.S. gets bigger
The largest wholesale grocery supplier in the U.S. got a lot bigger when it acquired Houston-based The Grocers Supply Co.’s wholesale distribution and supply business, which supplied 900 independent grocery stores.
C&S Wholesale Grocers, based in Keene, New Hampshire, made the announcement last Nov. 3.
Max Henderson
The integration of the largest wholesale grocery supplier in Texas is successfully moving forward, Max Henderson, president of Grocers Supply, tells The Shelby Report.
“The acquisition brought many loyal and longstanding customers and associates into the C&S family,” Henderson said. “The strong economic climate experienced in the southwest over the past several years provides an exciting opportunity for growth in this new operating region for C&S.”
The combined company operates under the C&S name.
The Grocers Supply Co. warehouses in Houston that C&S acquired include:
• Selection-Dry: 3131 East Holcombe Boulevard;
• Refrigerated/Frozen: 3100 East Holcombe Boulevard;
• GM/HBC: 3110 Corder Street;
• Produce: 3010 Hicks Street and 3000 Hicks Street; and
• Meat: 621 Waverly Street.
“We are committed to maintaining and enhancing our customer relationships as we leverage the scale of C&S and the operating expertise of the many proud associates of Grocers Supply,” Henderson said.
Though C&S bought the distribution and supply business, the Levit family continues to own and operate its retail stores, including the Fiesta Mart chain.
*Editor’s note: This 2015 Houston market profile by Terrie Ellerbee appears in the April print edition of The Shelby Report of the Southwest.