Jan 03

Behind the deal: Houston’s growth brought this furniture retailer to town

For Nolan Morrison, regional manager with American Furniture Warehouse, expanding the company from its locations in Colorado and Arizona to Houston was a numbers game.

Houston offered a lot of advantages to the Englewood, Colorado-based company, Morrison said. American Furniture Warehouse already had a sizable Houston-area clientele base, who previously had their furniture shipped in from out of state.

“So, to us, we looked at Houston and thought, ‘Here’s a huge market, it offers us the ability to expand what we will call local delivery for the website.’ Also, Houston (has) the high population, the geographic area and quite frankly, the growth,” Morrison said.

Ben Brown, the broker with Houston-based Baker Katz who negotiated for American Furniture Warehouse in its purchase of three Houston-area sites, said that Houston’s rapid-fire population growth brings opportunity for the company.

The company’s strategy, Brown said, was to maximize space throughout the enormous Houston metropolitan statistical area. To do that, the team decided to build three locations: one north, one west and one southeast. The Katy and Webster locations were announced last year, and the Conroe location was announced just this week.

All of the stores are on 20- to 30-acre tracts and will each span 355,000 square feet to 500,000 square feet. For all three stores, Houston-based Burton Construction is the general contractor, and Phoenix-based Butler Design Group is the architect. Each facility will cost around $50 million to build, employ 350 people, and generate an estimated $100 million in sales, Brown told the Houston Business Journal in 2018.

There are no plans to build another location, Brown said, until the stores are open and stable. Other cities in Texas like Dallas and Austin are options, both Brown and Morrison said, but they aren’t on the table yet.

“With how these mega-furniture stores trade, we really kind of capture all of Houston with those three units,” Brown said.

It was important the stores be alongside major interstates, Brown added. The newest, in Conroe, will be built along the west side of Interstate 45 at River Plantation Drive. The Katy store, to debut later this year, is at Interstate 10 and Pin Oak Road. The Webster store, which opened last year, is on I-45, near the NASA Bypass and TopGolf’s Webster location.

Brown credits municipal support for allowing these stores to happen. American Furniture Warehouse secured a 380 Agreement from the city of Webster for up to $7 million in tax rebates over a 16-year term and a 380 Agreement from the city of Katy for up to $6 million in tax rebates over an 18-year term.

In March 2018, American Furniture Warehouse secured a 380 Agreement from Conroe for up to $6 million in tax rebates over 16 years, but more details about the company’s plans for Conroe were not disclosed at the time.

“We’re just really please to have their support,” Brown said of the cities’ 380 Agreements.

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