Shoppes at Highway 6
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Listing Highlights
- •Fully Stabilized Asset
- •100% Leased
- •Triple-Net Leases
- •Shadow-Anchored by Walmart
- •High Traffic Counts
- •Strong Demographics
Philip Levy
Levy Retail Group
Investment Highlights
- Fully stabilized retail center with 100% occupancy
- Shadow-anchored by Walmart driving consistent foot traffic
- Triple-Net lease structure minimizing landlord responsibilities
- Diverse tenant mix of internet-resistant, service-oriented businesses
- Strong in-place cash flow with 7.04% cap rate
- Excellent visibility on Highway 6 with 47,000+ daily traffic counts
- Minimal near-term lease rollover risk
- Scheduled rent escalations providing organic NOI growth
Risk Factors
- Master lease covering 14% of GLA requires eventual permanent tenant placement
- Limited immediate upside potential given stabilized nature of asset
- Pizza Hut lease (16% of GLA) expires in December 2026
- Secondary market location may limit institutional exit strategies
- Limited historical capital improvement documentation
- Potential impact of e-commerce on certain retail tenants
Feature Tags
Underwriting Insights
The underwriting assumes the continuation of the strong occupancy trends and stable performance exhibited by the property. Key sensitivities include: 1) The impact of the master lease on 3,600 SF (14% of GLA), which while providing income security in the short term, may eventually need to be replaced with market-rate tenants; 2) The property's NOI of $668,361 appears sustainable given the diverse tenant roster and scheduled rent escalations throughout the rent roll; 3) Operating expenses of $394,693 represent approximately 37% of total income, which is in line with comparable NNN retail properties; 4) The majority of leases have built-in rent escalations, providing organic NOI growth and protecting against inflation; 5) While there is limited near-term rollover risk, investors should pay attention to the eventual replacement of the master lease unit and the potential renewal of key tenants like Pizza Hut, whose lease expires in 2026 (though they do have a renewal option).
Analyst Notes
Shoppes at Highway 6 represents a stable, cash-flowing retail investment with minimal immediate operational challenges. The asset's full occupancy with a diverse tenant mix provides defensive characteristics in an evolving retail landscape. The property's location in West Houston's established retail corridor, shadow-anchored by Walmart, offers long-term sustainability. While the property offers limited value-add potential beyond natural rent growth and eventual master lease replacement, it provides reliable income with a competitive yield (7.04% cap rate) relative to other investment options. The staggered lease expiration schedule minimizes concentration risk, though investors should monitor the Pizza Hut lease expiring in 2026 as it represents a significant portion of the GLA. The West Houston submarket remains resilient despite broader retail challenges, supported by strong demographics and consistent population growth. This investment would be particularly suitable for investors seeking stable cash flow with modest growth potential rather than significant value-add opportunities.