Commercial real estate firm JLL recently brought veteran broker Naveen Jaggi on board to strengthen its national retail platform. As president of JLL Americas Retail Brokerage, a new position, Jaggi oversees more than 100 brokers across 25 major markets from his base in Houston.
JLL's clients number 500 retail property owners and tenants. Jaggi, who spent 13 years at CBRE before joining JLL, spoke with the Chronicle about the retail landscape. Edited excerpts follow.
Q: How do different parts of the country compare when it comes to retail?
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A: On the East Coast, it's much more urban high street CBD (central business district) type of retail, as opposed to the South and the central and the Midwest, which is much more suburban. The West Coast is a mix of both. If you look at San Francisco, it's quite urban with Union Square. Los Angeles is a bit of a hybrid. It has lots of dense urban and suburban submarkets, but no core like New York City.
Q: What does Houston have?
A: Houston is still historically a suburban-driven, box-shopping-center retail environment, but it's changing. The Galleria has ... been considered the center of retail in the city. Actually, a lot of focus is coming back to ... the Galleria. Now we're seeing all this retail development going from the Galleria down Westheimer and Post Oak. Clearly all the development going in along Westheimer, that certainly is anchored by Highland Village, and now by OliverMcMillan's River Oaks District.
Q: How do you see low oil prices affecting the retail sector?
A: Clearly, low oil prices leave the consumers with more money in their pocket, which will result in increased spend across the board. The retailer in the short term will also benefit.
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Q: Will Houston be impacted differently than other areas?
A: Houston is always going to have a more significant reaction than the rest of the U.S. in terms of how the price of gas goes. When oil companies scale back investments in energy-related projects, that does have a chilling effect on long-term retail investment projects.
Q: What areas of Houston are seeing the most retail expansion?
A: Along the U.S. 290 corridor going up toward the outlet center, development is tremendous. Katy, of course, along the Grand Parkway, great retail projects are being discussed and talked about. Clear Lake City and League City. Those are some terrific retail hubs. I get most excited about the Inner Loop development that's happening. Mixed-use, vertical, high-density retail development is new in Houston. We've never had that before.
Q: What's driving it?
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A: People are choosing to live closer to the city. There's a move to move closer in. All validated by the number of residential units being developed inside the Loop. Retail is attracted to the density of that residential development. That's bringing all that product in. Land costs are so high that you have to go vertical. Therein lies the attraction to build vertical projects with retail at the ground floor.
Q: What sectors are seeing a lot of activity in Houston?
A: Fashion, furnishings and value retail. They're looking at the entire city. The Galleria, west Houston/Katy and The Woodlands are the three most attractive markets for retailers to look at.
Q: What trends do you see for Houston as a destination for luxury retailers?
A: I think the River Oaks District will be a grand success and their pursuit of luxury retailers and their ability to secure a number of them to me says that Houston will grow as a luxury retail destination. Luxury retailers are going to look at OliverMcMillan's place first, if they want to go outside the mall. Second to the River Oaks District will be Highland Village. I'm a big fan of Highland Village. They have demonstrated that quality, high-end retail at a street level in Houston can be a great success.
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Q: What do you see as the future of malls?
A: I'm a big believer that "A" quality malls will always survive. There's a place for malls in the American consumers' mind set when they want to go shopping.
Q: How are they changing to adapt to what consumers want?
A: One is minimizing the centralized food court as a magnet and placing an emphasis on quality amenities for gathering besides food. Diversity, the retail tenant mix, and then clustering like-minded retail into certain areas of a mall. So creating more synergy from store to store.
