Conn’s Closes: Texas Retail Shake-Up 🏬💥

August 23, 2024•3 min read

Conn’s Closes: Texas Retail Shake-Up 🏬💥

Texas Retail Faces Conn’s Shutdown 🛒🚪

If you’ve been keeping an eye on the retail scene in Texas, you might have heard about the recent buzz surrounding Conn’s HomePlus stores. The well-known retailer, headquartered in The Woodlands, has decided to close all 174 of its stores, along with around 380 Badcock Home Furniture stores, following a bankruptcy filing in July. This move leaves behind a significant footprint—nearly 4 million square feet of industrial space across the state. 😲

But what does this mean for Texas? 🇨🇱

First off, it’s important to note that Conn’s isn’t just saying goodbye to its retail outlets. The company has also announced layoffs, impacting 267 workers across locations in The Woodlands, San Antonio, Beaumont, and Grand Prairie. This includes both call centers and industrial facilities, signaling a broader impact beyond just empty storefronts. 💼

What makes this situation unique is that, unlike other nationwide closures—like those of Red Lobster and Buca di Beppo—Texas will feel the sting a bit more with Conn’s. Typically, underperforming locations are scattered across regions where population growth and demographics don’t favor retail success. However, this time, Texas, with its generally strong market, is taking a bigger hit. 📉

Conn’s currently operates 83 locations across Texas, including a significant presence in industrial and office spaces. For instance, their largest property, located at 1401 Rankin Road in Houston, houses a clearance center, distribution center, and corporate office, all within a 657,000-square-foot space. Another prime spot is a 443,000-square-foot Class-A industrial facility in Grand Prairie, which is less than two years old. 🏢

The closure of these locations might seem like a gloomy forecast, but it’s not all bad news. Texas has enjoyed a robust industrial demand, outpacing the rest of the country. Even in the retail sector, vacancy rates are low—just 2.6% nationally in the first quarter, with Texas being a strong player in that mix. Retail construction has slowed down, and where it’s happening, about 75% of the space is preleased. This means there’s still demand, and Conn’s departure could open doors for new tenants, possibly even leading to higher rents in some areas. 📊💸

However, there’s a catch. Conn’s stores range from about 5,000 to 77,000 square feet, which is larger than what most retail users are looking for. While these spaces could be divided for multiple tenants, the sudden exit of a large anchor store like Conn’s could have a ripple effect, potentially causing smaller tenants to follow suit. ⚠️

So, is this a red flag for Texas retail? Not quite. It’s more of a yellow flag, a reminder to stay vigilant as we navigate these changes. The fundamentals of the market are still strong, especially in Texas and the broader Sun Belt region. But with so many closures happening across the country, it’s worth keeping an eye on how this shakes out. 🔍

In the end, Conn’s closure is a significant event, but it’s not a death knell for Texas retail or industrial markets. Instead, it’s an opportunity for landlords and new tenants to step in and reshape these spaces for the future. 🌟

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Bill Rapp, CRE Broker

I am a Houston commercial broker, with residential experience, as well as a lending background. I have been in the real estate industry for 14 years and counting, and I have worked in many roles within the industry and each has given me a unique perspective of the industry as a whole. My dedication to clients is rooted in this industry knowledge, but also includes my desire to go the extra mile in networking to source off market opportunities for my clients. Me and my team at eXp Commercial have a cutting-edge technology package that gets the widest exposure for each transaction. eXp Commercial offers a nationwide network through which we can deliver the best exposure and professional advice to achieve our clients’ goals while also minimizing their risk. Clients appreciate my methodical method of discovery in our initial consultation. Through which we can get to know each other and their specific’s business’s needs and objectives on a granular level. Our processes help navigate each transaction and its potential pitfalls through to a successful outcome for our clients. It is my stated goal to provide our clients with extensive market analysis and expertise that fosters innovative solutions and rewarding commercial real estate opportunities.

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