Business

Houston’s Grocery Market Growing Fast, But Not Equally Across The Region

Suburban Houston is seeing more new openings than the inner loop

Greater Houston is a fast-growing market for grocery stores.

There are new openings all the time, like just this week when a new HEB opened in Baytown.

It’s a large, 102,000 square-foot store with a bakery, meat market and freshly prepared meals, which also offers grocery pickup service. It joins a Kroger across the street and an Aldi and Walmart further down the road.

Armando Perez, senior vice president of HEB Houston, said there are several factors that decide where a new store will go.

“Sometimes we’re looking at, hey, is it time to replace a store because we’ve been here for so long now,” he told News 88.7 before the ribbon-cutting ceremony for the new store. “And sometimes we look at, what’s the population of the area, what’s the growth of the area and how much volume do you think that we could run out of a particular location. Those would be the primary things we’re looking at.”

The new Baytown HEB is the chain’s 99th Houston region store overall, if you count HEB’s other brands, including La Tienda, Joe V’s and Central Market.

Other grocery chains, like Kroger, are also expanding in Houston.

Barbara Stewart, professor of retail and consumer science at the University of Houston, said there’s one reason in particular that drives the grocery market here.

“Population growth is good,” she said. “We’re in a moderately good economic time and people continue to need to eat.”

But the number of grocery stores isn’t growing equally across the region.

It’s especially Houston’s suburbs where stores are popping up like mushrooms. For example, of the 99 HEB stores, only 15 are inside the Beltway and just six inside the 610 Loop.

Simmi Jaggi, senior vice president of commercial real estate firm JLL in Houston, said a lot of that has to do with the region’s many master-planned communities.

“If you look at master-planned communities, they have a captive audience and a captive population base,” she said. “That allows a grocery store to come in and kind of service that consumer base in that population in a somewhat controlled environment. So you have a captive audience that’s there and you have barriers to entry where there’s not going to be 10 competitors.”

Inside the loop, things look different. Downtown, for example, has no grocery stores other than Phoenicia, an upscale gourmet food store.

Why is that?

Jaggi said it comes down to availability of land, and in some of these urban areas developers tend to make more use of land by building up.

“So it’s difficult for a one-story user to compete with the user, or the development, that’s going to be eight, nine or even 20 stories,” she said, “because they are building vertically with more rentable square-footage.”

So it might become inevitable for retailers to think in those terms, too, when it comes to urban expansion. Jaggi expects to see more grocery stores taking up part of multi-story buildings, as the urban population keeps growing.

Chains like HEB are already exploring that.

 “Next year, we’ll open up our first two-story store in Bellaire, on Bissonnet and Rice,” Perez said. “And a part of the reason that we’re going to multi-level stores is because it is increasingly difficult to find large pieces of property to build a single-story store.”

Another two-story HEB is under construction in the Heights.

But other areas are still not on the map for large retailers: Houston’s food deserts, like the East End or the Third Ward.

Asked about that, Perez said for his company it comes down to whether an area makes market sense.

“So the East End is currently trading and changing and there is some population growth in the area as it regentrifies, and we continue to look at the area,” he said. “But you’re also evaluating all of the areas within our vast trade area to decide which is the next place that you want to place your resources.”

Stewart, the UH professor, said margins are just too slim in the grocery business to open in areas that don’t promise an immediate return of investment.

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Florian Martin

Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters and the Houston Press Club. Florian is a native of Germany. His studies...

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