Shopping center

The center anchored by Whole Foods in Sugar Land sells

On the heels of reclaiming a Whole Foods center in West U, a New York-based real estate company is taking over another mall anchored at Whole Foods in an affluent suburb of Houston, as retail centers in Retail anchored in a grocery store continue to be popular choices for investors in the pandemic.

Brixmor Property Group, a real estate investment trust, recently entered into an agreement to purchase Lake Pointe Village, a 162,000 square foot retail center at the corner of Highway Southwest/I-69 and Highway 6 in Sugar Land, about 21 miles southwest of downtown Houston. Lake Pointe Village is anchored by a 50,133 square foot Whole Foods, but also includes Torchy’s Tacos, Churrascos, Five Guys, Pot Belly, Orangetheory Fitness, Buff City Soap, Mathnasium, The Joint and European Wax Center.

“This particular Whole Foods Market (in Sugar Land) is consistently one of the best performing in the entire Houston chain, and the property enjoys exceptional traffic, freeway visibility, and access. The property is in a planned community with attractive demographics and a highly skilled and skilled workforce,” Daniel Sutherland, Senior Vice President of Acquisitions and Disposals at Brixmor Property Group, said in an email. .

Real estate firm CBRE represented the seller, a subsidiary of Invesco, and Brixmor represented itself in an agreement that was reached on June 10, according to Brixmor. The sale price was not disclosed, but the property had a market value of $8 million, according to the Fort Bend County Central Assessment District. However, that price is likely an understatement because a nearby mall, 1525 Lake Pointe Parkway, is a fraction of the size (15,000 square feet) and listed for sale at $8.5 million. This property, Lake Point Village East, is currently under contract, according to commercial real estate website LoopedNet.

For context, Brixmor acquired another smaller Houston-area anchored Whole Foods mall, the West U Marketplace near West University Place and Bellaire, in April for $33.5 million. The West U center came in at around $558 per square foot, and although it’s in a totally different part of Houston, that’s indicative of the price these types of Whole Foods centers can fetch in the Houston area.

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Brixmor describes itself as one of the largest outdoor mall owners in the Houston area with a total of 30 malls totaling 4 million square feet in the metro, the spokeswoman said. Nationally, Brixmor has approximately 67 million square feet in its portfolio.

Located at 15900 Southwest Freeway across from Sugar Land Town Square, the highly visible Village of Lake Pointe sits in an affluent and highly educated community where within a 3 mile radius the average household income is $157,000 and approximately 62 percent of residents have a college degree, according to Brixmor. Given that the center is only 87% occupied, Brixmor argued that it is possible to lease the center at current market rates, presenting an opportunity to increase the center’s profits over time.

“Our cluster strategy is to own grocery-anchored malls that create critical mass and densify our portfolio in attractive submarkets,” Sutherland said. “We recently purchased a few centers anchored in Whole Foods (Houston, Chicago), but we are still targeting centers anchored in high-quality, value-added grocery stores in target markets.”

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Investors have chased retail anchored in grocery stores throughout the pandemic as a hedge against swings in the economy. A record number of grocery-anchored retail businesses took place last year with a total of 735 transactions nationwide and total transaction volume reaching more than $13.3 billion, the largest share of all types of retail businesses for a third consecutive year and the second highest level on record, according to research by real estate firm JLL.

In 2021, new leases for grocery stores tripled compared to the same period in 2019, according to real estate company JLL, citing data from Datex. Last year, Whole Foods announced it would open 43 more stores in mostly urban areas, and while it didn’t state a specific time frame, so far this year it has opened at least six stores. nationwide, according to its website.

Brixmor’s latest deal with Sugar Land comes as the Houston retail market has seen strong demand this year. Vacancy rates hover around 5.2% in the metro with around 6.1 million square feet of positive net absorption over the past year, meaning many more retailers are moving into storefronts than to move, according to commercial real estate data company CoStar. This is the second highest level of net absorption in the nation after Dallas-Fort Worth, which had 6.8 million square feet of net absorption over the past year.

“We see many opportunities to improve merchandise centers to truly make them the hub of the communities they serve,” Sutherland said. “Brixmor is uniquely positioned to outperform given our extensive Houston portfolio, our local Houston office, and the breadth of our national and local tenant relationships.”