Comment of the Day: That’s a Different Kind of Growth in Oak Forest

COMMENT OF THE DAY: THAT’S A DIFFERENT KIND OF GROWTH IN OAK FOREST “The new $550k mcmansions in Oak Forest are replacing other housing units one for one, and the types of households that are getting displaced were already reasonably well-off and were all also living in houses that were just as sufficient to accommodate large families as the houses that are replacing them. By comparison, neighborhoods like Montrose, the Washington Avenue Corridor/Rice Military, and Uptown/Briargrove have been actively displacing small lower-income households with vast numbers of affluent households. I’d wager that there isn’t much of an increase in the number of people per household either, but the sheer number is increasing in a way that the deed restrictions in Oak Forest or Garden Oaks ensure will never happen there. Meanwhile, a $550k mcmansion in one of the single-family neighborhoods in those parts of town is often pushing the $1 million mark, and I’m sure that that also correlates to the types and profit margins of groceries that are purchased. So if you’re wondering why you don’t have urban core amenities in the suburbs . . . it’s because you live in the suburbs. They got built out a long time ago, the retail base is already established, and improvements will be slow and incremental.” [TheNiche, commenting on Apartments To Be Knocked Down for New H-E-B, Apartments on San Felipe]

13 Comment

  • I have friends that have been looking in Oak Forest. They would like to know where they can get one of these $550k McMansions. Everything in Oak Forest is now @700k+.

    Also, most of the original housing stock was @1000-1200 sq ft. When I was looking in Oak Forest a few years ago before the boom started, I actually thought that the neighborhood was too low income to turn around any time soon. While the number of residents may stay about the same, the change in socio-economic status is quite stark.
    The issue isn’t really urban v. suburban. The issue is high end grocer versus low end. Folks in Garden Oaks/Oak Forest are heading all the way down to Whole Foods or out to HEB in Bunker Hill for groceries.

    Add the tons of new townhomes being built in Shady Acres to the rapid gentrification of Garden Oaks, Oak Forest, and the Heights, and you do have to wonder why HEB is still sitting on a dumpy low end store on 18th. Shady Acres is taking single family lots with 3-6 residents and replacing them with townhome clusters of 8-12 single family units. So, in the Greater Heights area you have both significant highend gentrification and population growth on the upper/middle end. The only difference between that area and Montrose/Galleria is that the movement in the market happened later.

    I think the reality is that HEB wants badly to get into the area, but keeps getting beat by Kroger and Walmart who have deeper pockets. The 18th street location is just awkward enough in terms of connectivity with the rest of the Greater Heights that HEB will probably just wait and see whether the Greater Heights completely fills out before making a big investment on what is not the best location.

  • Huh? First of all, your premise that suburbs don’t have nice big grocery stores is puzzling. Have you been out to Katy or The Woodlands lately? HEB and Kroger build nice new stores there that have as much or more square footage as, say, the Montrose HEB on Alabama.
    Second, I think the lack of construction of new retail in Oak Forest/Timbergrove/Shady Acres/Sunset Heights is 2 part. First of all, the cost of acquiring a large tract of land is expensive, and would likely involve the purchase of contiguous lots from more than one owner. Second, the site teams that look for new locations are relying on outdated demographic data about these areas. Even just 5 years ago, the average household income in these neighborhoods was probably below the current level by double digits in percentage terms. The Oak Forest homes that are being knocked down are generally in the 1000 to 1400 square foot range, and the new builds are at least double that. Price of entry has increased substantially. South of 610,townhomes built in the west teens and 20’s in 2007 averaged about 200-250k new. The stuff going up today is seldom priced below 300k. It is likewise pretty difficult to find a home in Oak Forest under 250k.
    So, though these areas do not have home values approaching 1 million like Rice Military and points south, they in fact could support a 100,000 square foot suburban style HEB, which is what the original commentator was asking for.

  • I do sorely wish HEB would consider planting one of those fancy stores somewhere in Oak Forest, like the one they put in off West Alabama in Montrose. That Kroger on 43rd near Ella is a horrible place, full of wailing and gnashing of teeth. There is no easy exit. The only thing is a guide to escort you through the descending aisles of its hellishly overcrowded layout. God help you if you forget an item on the other end of the store. And yes, you may be only two cars away from leaving the confounding parking lot, but you will wait, and you will not like it.

  • I was told by an architect friend a few years back that the reason HEB at 18th hasn’t renovated is due to the insurance cost that would arise as a result. The entire strip center and parking lot lies 4-6′ below the level of the street and funnels back to the bayou. They could easily close it and open someone nearby but I suspect that they are staying put due to loyalty to the residents, many that have been there for 30-40 years.

  • In my dreams, HEB (okay, it’s Central Market) swallows the Sears at 43rd & Shepherd. More plausibly, Trader Joes overtakes the dollar store on 43rd at Rosslyn. That would be quintessential incremental change.

  • @ Old School: The new houses that are just now getting built are going for a much higher price point than what had been built over the last decade. The newest housing stock and 2013 home pricing is not (yet) representative of the demographic composition of the entire neighborhood. It’s only the leading edge. It’ll take a decade or two for today’s leading edge to average out…and then there’ll be a new leading edge.

    But big retailers, and grocers especially, cannot afford to look at the leading edge. Their margins are very thin.

    Grocers are also especially challenged as a class of retailer because all households buy basic groceries and because basic grocery expenditures do not rise in direct proportion to household income. The number of mouths to feed (and asses to wipe) drive volume, and volume counts.

    As an example, the 43rd Street Kroger is only a little bit smaller and has a very similar selection to the Buffalo Speedway Kroger. Their pricing policy is identical. A can of Wolf-brand chili takes up the same spacial footprint in both places, costs Kroger the same to acquire, and will be sold for the same amount. But the chili’s spacial footprint is more expensive on Buffalo Speedway than on 43rd, so the margin is lower in the nicer neighborhood. Look at all the stuff that’s on the shelves. Most of a store’s spacial footprint is dedicated to basic groceries, and that part of a store is all about driving sales volume. That’s where density matters. Income matters, too, but not as much above a lower-middle income threshold. The more density is crammed into a city, the more grocers are viable within a short distance of one another. When grocers are in competition like that, that’s when you see architecture get taken to a new level.

    However, in addition to having a permanently low density, Oak Forest/Garden Oaks do not have very many parcels of land that are large enough to do a full-size grocery store in a prime spot. (And I’m blowing off the Shepherd corridor completely for the same reason that I’m dismissive of high-end retail along Bellaire’s western periphery. It’s a demographic precipice.) The selection of sites includes the Kroger, the retail across from Kroger, and maybe the Family Dollar site at Rosslyn and 43rd. Anything else would take a lot of assemblage to put together. Unless you’re Trader Joe’s…

    Don’t get me wrong. Income matters, too. Someone living in a $180k house that’s lot value that they bought for $100k ten years ago probably isn’t going to buy a $9 jar of spaghetti sauce. OTOH, many wealthy households won’t do anything quite that stupid, either. Wealthier households will also tend to eat out more, reducing their need for groceries. The stores’ response to this is to offer more and more elaborate selections of prepared foods; and also a better beer and wine selection. But…you know, all it takes is a TJ’s nearby and that’ll take the wind out of a full-format grocer’s efforts at making a good volume of those high-margin grocery sales.

    So yeah, I think that the 43rd Street Kroger should undergo a partial remodel to be more similar to Disco Kroger, but there’s nothing inherently wrong with the store. Between that and a TJ’s, I think that that neighborhood would be covered for a while. Not forever, but for a while.

    @ ShadyHeightster: The pockets of affluent inner-suburbia are much, much smaller than places like Katy or The Woodlands, and they tend to border up on neighborhoods with abysmal demographics. The newer master-planned communities also don’t have the same spacial challenges as the older ones and in the case of The Woodlands have had a corporation providing iron-fisted civic management, zoning, aesthetic requirements, etc. Otherwise, I think you’ve got a good handle on the challenges facing full-format grocers in places like this.

    @ Anse: FWIW, before I lived in the Museum District, I lived in the Oak Forest area. I’ve shopped at the 43rd Street Kroger and also the new HEB on W. Alabama many, many, many times. I actually preferred the 43rd Street Kroger. It was quieter, low key, and open 24 hours. But I also actively dislike the experience of walking around in a Whole Foods. Maybe I’m just weird. Oh well, my two cents.

  • Niche, I’ll agree that you may be weird, but I’ve never been that taken with Whole Paycheck either. And I’m pretty sure I’m their target demographic (well, except that I’ll NEVER wear yoga pants).

  • The Oak Forest area is probably as good as its going to get right now in terms of retail. There is still a vacancy in the newish shopping center where Plonk sits, behind the Starbucks drive thru. At least we avoided a payday loan storefront, so that’s something. At Ella and the railroad tracks we got a storage place. Where Theatre Suburbia used to be, across from Oak Forest Elementary, we got a credit union.

    We bundle the children into the car, drop them off at Oak Forest Elementary, drive thru Starbucks to get a latte, drive thru Walgreens to get our prescriptions, drive thru Shipley’s to get donuts, drive thru Chase to make an ATM withdrawal to pay for our coffee and donuts. There is absolutely no reason for Oak Forest area residents to expect anything other than what we have. As long as residents have to get in their car to get a bite to eat, or pick up groceries, most won’t mind driving a bit further to Central Market or Whole Foods for a more upscale shopping experience. The only recent project I can think of where someplace actually became more pedestrian-friendly is the addition to the Oak Forest Public Library, with a new entrance on Oak Forest Drive.

  • Most wealthy households I know buy almost exclusively store-brand groceries.

    Best way to get rich is not to spend what you earn.

  • @Niche: You are now just inventing a reality to justify the fact that you are about 5 years behind what has been happening in that part of Houston. Wealthy families do not buy that many groceries? Have you seen the size of the refridgerators they put in those new builds? And you completely ignore the fact that there is population density coming to the area and just focus on one neighborhood. Cottage Grove, Shady Acres, and Sunset Heights are all seeing significant increases in density. Frank Liu has practically built a new subdivision of townhomes in Cottage Grove, with lots more on the way in the Heights. The demand and density in the Greater Heights is there. It is just the awkward set up of the few retail areas and lack of connectivity that keeps the big grocers down by I-10 instead of making a big investment in a booming market.

  • @ Old School: I did not say that wealthy households do not buy many groceries, and I especially did not identify them as being families.

    Also, I am focusing on one area, north of 610, because my “Comment of the Day” was in response to someone lamenting the lack of an HEB in that area. I know that the Greater Heights has an HEB fetish, too, but this one wasn’t about them. Contrary to their own opinion, discussions can’t always be about the Greater Heights.

  • @ShadyHeightster: I think (know) you are incorrect about the level & quality of information available to the HEB real estate department. My experience has been that the HEB folks are very well informed with the best available data. And as they’er a local company they know even better what’s going on in the various submarkets rather than say an Aldi helicoptering in and deciding where to put stores.

  • Nah, the “privileged” that are buying these overpriced, excessively large houses buy groceries – in fact they represent overconsumption in every way. And Oak Foreat used to be called middle class neighborhood and now you are calling it low income?