By Steve McLinden, Contributor | Commerce + Communities Today
October 15, 2021
The first fully air conditioned mall in Houston has a new kind of cool. The 60-year-old PlazAmericas, one of the city’s first fortress malls is being recast to cater to the community’s massive Hispanic sector.
Beset with high vacancies when Baker Katz bought it in late 2018, PlazAmericas’ first-floor occupancy has soared to 98%, and the second floor is holding for at 75% while more leases are pending, Baker Katz principal Kenneth Katz said.
Baker Katz bought the bulk of the 36-acre facility — roughly 850,000 square feet — from Rait Financial Trust. Other owners have included Travelers and two investment groups: New York’s Sharpstown Center Associates and Urban Mall Houston. The 10-story, 125,000-square-foot attached Jewelry Building, long serving as the city’s informal diamond district and still wholly occupied by jewelry businesses, wasn’t included in the Baker Katz purchase. Other segments, including anchor spaces and outer portions, also weren’t included.
The purchase was Baker Katz’s first enclosed mall venture, a decided step up in scale for the 14-year-old, full-service firm whose prime focus has been small open-air properties. “For projects like this to succeed, I think it takes a smaller, nimble company that can adjust on the fly or a bigger one that already operates like that,” he said. “Decisions have to be made in a matter of hours, and you have to be able to empower your employees on the ground to make them.”
Baker Katz aims to shape the mall into a community center that fills the consumer, recreational and social service needs of the area’s population. Independent shops constitute most of its tenancy. Of the 240 PlazAmericas businesses, only 10 are national names.
4%
National Names among PlazAmericas’ tenant roster
Gone are the old triple-net lease requirements, minimum lease terms and other strict financing demands for prospects. “Leasing people tend to put up barriers instead of breaking them down,” Katz said. “We make it easy; we don’t ask too many questions.” Rent collections are still “really, really strong, though they don’t come without effort. We empathize with tenants; sometimes they need a little more time to pay.”
Born in 1961 as Sharpstown Center before adopting the name of Sharpstown Mall, the facility survives as Houston’s oldest enclosed mall. Named for local post-World War II developer Frank Sharp, the mall opened with 43 stores, including Foley’s, Montgomery Ward, Florsheim Shoes and Battelstein’s. Future Sen. Ted Kennedy spoke on opening day.
As late as 1989, Sharpstown Mall was 97% occupied, but the openings of nearby Westwood Mall and The Galleria eroded patronage. In 1996, Sugar Land, Texas’ then-new First Colony Mall clipped many of Sharpstown’s surviving national retailers. Previous owners seemed to cling to what Sharpstown once was, Katz said. “But it was past that point.”
Retenanting
How did Baker Katz arrive at its retenanting strategy? “It became apparent with the passage of time,” Katz said. “And it didn’t take us too long to figure out a path.” Anchors are Burlington, America Cinemas, USA La Sorella fashion, Gold Factory & Imports, Clarewood Supermercado and SuperNova Furniture, and merchants like Casanova Collezioni fashions, Iced Out Belt Buckles, Mega Mangos, Banana Bay Bar & Grill and local chain Uniform Superstore round out the mix.
An internal Spanish-speaking management team markets the space. The mall also caters to a strong Black clientele and tenancy, said Katz.
Situated at the high-traffic corner of Interstate 69 and U.S. Route 59, the mall does business in the most densely populated and thnically varied section of Houston, which is among the most diverse cities in the U.S. Not only is PlazAmericas highly visible, but also “there’s a huge daytime use, dense population and a college down the street,” said Katz. “Yet, we’re only a few miles away from a Houston fortress mall.”
Multiple stores cater to quinceañeras, which celebrate Hispanic girls’ 15th birthdays. There are more than a dozen jewelry stores. An 83,000 square-foot mercado, or market, offers micro-lease spaces as small as 200 square feet. “Occupancy costs are low for our merchants, and that helps from a branding perspective so people understand our incubator focus,” Katz said. Many occupants were running retail or food businesses out of their homes, “and we wanted to give them their shot here.”
Entertainment features for kids include mariachis, clowns, a children’s play structure and a 15-person space for art with easels. “On weekends, the place is crawling with kids,” Katz said. An events center is also under construction.
The burgeoning Hispanic demographic in the U.S. is hard to ignore. By 2024, U.S. Hispanics are expected to spend $1.9 trillion on consumer goods, up from an estimated $1.6 trillion in 2021, noted Statista. Hispanics will constitute 20% of the U.S. population by 2025, up from 17%, or 61 million people, now, according to the Center for Economic and Policy Research. The median income for U.S. Hispanic households has grown from $43,013 in 1990 to $55,321, Statista reported.
Nonprofits like Houston-based Alliance, partner with PlazAmericas for events dealing with immigration issues, COVID-19 testing, educational opportunities, job opportunities and school supply giveaways. The center still relies a little too much on retail, Katz said. “So we’re having conversations with education and medical users and social services agencies that are buried on backstreets that want to be more accessible to the people they serve.”
At least one other well-occupied Hispanic-themed mall in Texas has emerged through reimagination: Fort Worth’s La Gran Plaza, formerly known as Seminary South. “We’re seeing an increased focus on leasing aimed at the Hispanic market because of how strong they are as a consumer,” said Javier Zablah, associate with Weitzman, which is active in multiple Texas markets. “The Hispanic consumer is built upon a strong sense of family and community, so if you’re able to tap into the Hispanic market correctly, you gain a large and loyal customer base.”
The strategy of building a tenant mix through a deep cultural and demographic dig might just demonstrate a path forward for other developers. “We have created a commmunity environment that is authentic, and it feels that way when you come in,” Katz said.
This story originally appeared in Commerce + Communities Today
Archives
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- August 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- October 2019
- September 2019
- August 2019
- May 2019
- April 2019
- February 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- December 2014
- November 2014
- August 2014
- July 2014
- May 2014
- April 2014