Over the next five years, U.S. malls are expected to fall prey to a weakening retail market as stores shutter and e-commerce sites chip away at brick-and-mortar sales.
Between 20 and 25 percent of U.S. shopping malls could be shuttered by 2022, according to a 2017 projection from Switzerland-based Credit Suisse, a global financial services company.
In addition to shopping mall closures, retailers are on pace to close more stores in 2017 than in the Great Recession of 2008, with approximately 8,640 U.S. store closures expected through the end of this year, according to Credit Suisse. About 6,200 stores were shuttered during the recession.
National chains that have shut stores around the country, including in Friendswood, are Bebe, Payless Shoe Source and, most recently, Sears.
Although the retail market around the country seems dim, the Houston area continues to be healthy, recording vacancy rates of 6.3 percent and rental rates higher than the national average in the first quarter of 2017, according to Houston-based Transwestern, a commercial real estate firm.
“The health of the retail market in the Greater Houston area is strong,” said Nick Hernandez, managing director of the retail sales group at Transwestern. “Rents are certainly maintaining, and they’re definitely not going down. ... It’s certainly at the height of health right now from an occupancy standpoint.”
Baybrook Mall is one regional mall in the Houston area that has grown considerably over the past couple years by 600,000-square-feet in 2016 with the completion of its outdoor lifestyle expansion and of big-box retailers like Dick’s Sporting Goods and Total Wine & More. Currently, Baybrook Mall has 1.8 million square feet of retail space.
“Baybrook is thriving. We provide a community gathering place where you can have experiences—the dining experience, the entertainment,” said Jeffrey Gionnette, general manager at Baybrook Mall.
The expansion comes at a time when the area is grappling with growth. Within a 26-census tract area in southeastern Harris County alone—along I-45 between Beltway 8 and Clear Creek—the population was estimated at 151,543 in 2015 and is expected to climb another 18,000 by 2025, according to projections from the Houston-Galveston Area Council.
The mall’s trade area serves more than 830,000 people with an average household income of $89,473, according to General Growth Properties, the real estate company that owns Baybrook Mall.
While Baybrook Mall has seen its share of retail closures—Sears, Bebe and Payless this year alone—the mall has a nearly 100 percent occupancy, Gionnette said, although official figures were unable to be released.
“I think people appreciate getting out, getting a bite to eat and enjoying themselves. That’s something to do in addition to shopping,” Gionnette said.
Baybrook’s continued success has rested on “experiential retail” through which the mall becomes a curated experience that transcends the notion as being just a place to shop, Gionnette said. Baybrook Mall is cornering the market on experiential retail in Southeast Houston by attracting high-end restaurants, adding an outdoor lawn area for live entertainment, tacking on high-end brands, luring a movie theater and creating an experience that cannot be replicated online.
“There are so many arts and cultural opportunities, and I would love to bring them here,” Gionnette said. “I want to open the stage to the community.”
Major brands like Kendra Scott, Arhaus, Zara, Anthropologie and Sur La Table have opened their first southeast Houston area locations in Baybrook Mall over the last two years, saving residents a trip across Houston to the Galleria or Rice Village.
“There was a whole tenant mix that wasn’t down here [prior to the expansion],” Gionnette said.
Baybrook Mall has also invested in technology like a cellphone application called GGP Malls, which allows users to navigate inside the mall, get the latest deals and find parking.
