Houston-based commercial real estate company Fidelis has acquired the 300,000-square-foot Shops of Bella Terra strip center along the Grand Parkway near the Westpark Tollway.
It’s the sixth property Fidelis has purchased this year after strip malls in The Woodlands, Fort Worth and Odessa, Texas; Rapid City, South Dakota; and Santa Fe, New Mexico. And the company expects to close on three additional properties before the end of 2021, said Lynn Davis, co-president and chief leasing and development officer at Fidelis. Those properties are in Pearland, Rapid City, and Albuquerque, New Mexico.
Fidelis has not traditionally focused on acquisitions and usually develops more of its own retail centers. But a steep increase in construction costs as a result of material and labor shortages during the pandemic led the company to form a discretionary fund for retail acquisitions this year.
“It's been harder to develop than it has been to buy … assets, where we can purchase them at about 70% of replacement cost,” Davis said. “And we can achieve development yields without taking the risk of developing.”
Davis declined to disclose the purchase price for the Shops of Bella Terra or the dollar amount in the discretionary fund. She said there is enough for two or three more properties in what Fidelis calls “Retail Opportunity Fund 1.”
“We’ll continue until we finish that, and then if we still feel like the market is giving us good assets to purchase, we’ll form Fund 2,” Davis said. “But we'll see.”
In the meantime, Fidelis continues to develop some properties and plans to go back to focusing more on developments in the future.
“We already have land holdings that we want to develop,” Davis said. “So if the construction costs will come back down some, we'll probably develop some of those land holdings that we already have, as well as look at new land holdings.”
Recently, Fidelis broke ground on the H-E-B-anchored The Market at Willis Shopping Center in Willis, north of Conroe. The nearly 70-acre retail center is slated to open next year, with continued growth planned. Phase 2 construction, to start in the third quarter of next year, will include a three-story, garden-style multifamily complex with 250 apartment homes.