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Houston Economic Rebound; retail franchise locations

Houston Economic Rebound; retail franchise locations
Author: Lance Winslow

Houston has always been a boom or bust economy. Yet it is America’s third largest city with 5.5 million people. The ten-year economic cycles have been caused by oil price fluctuations. But as Houston diversifies its economy and matures it employs larger and larger percentages of folks in retail and service sectors. Let’s discuss some other economic issues during the last recession in Houston. Albertson’s pulled out of the Houston Market, Wrath left by Enron, Arthur Anderson Collapse, Continental Airline Lay offs, HP-Compaq merger and all the oil mergers just prior. All these large corporations hurt the Houston Economy along with the telecom layoffs too; but that was over four years ago. Today we see a massive rebound and the price of oil has helped tremendous profits from the major oil companies there.

If you drive around Houston and it’s inner suburbs, you see entire shopping centers, which are not doing so hot. Last year there was an article in the Houston Business Journal of the anchor store in many shopping centers through out Houston pulling out. Kmart, took out some stores, so did three other big box stores and a few consumer electronics places and larger furniture stores, now Albertson’s has left. Who gets hurt? The franchise stores who pay a high price and lease to be in those centers along side a big anchor tenant. Think about it, Albertson’s with their large super stores with Banks in side, Starbucks coffee, bakery, mini eating area, film developing and pharmacy.

If you are a franchise store and are in a ten-year lease and your anchor tenant up and moves, you are left holding the bag and with less traffic in the mall, sales will go down until eventually you file bankruptcy, jump out a window or drown (especially on Houston’s East Side-Flooding). Many small business people lose fortunes when anchor tenants moves, demographics in the area shift or economies go through cycles. Houston is on the rebound and times are good again, so is growth in all the suburbs, but one does not have to look too far thru the recent periods to see the city is changing and the cycles are still remaining. Think about it; location, location, location.

Lance Winslow