A quick scroll through the neighborhood Facebook page will show you everyone has a theory of how Pine Market could be better, some self-proclaimed experts even claim to have inside information, but notably absent are most of the business owners. Where are these people? If they are our neighbors, why aren’t the speaking up?
Generally speaking, the consensus seems to be that high rent prices are to blame. While that is partially true, it isn’t the whole story and it lacks a lot of context. It’s time the veil be lifted.
Join us below for a peak behind the curtain.
Pine Market consists of the development east of Fish Creek, between Central Pine and Woodforest Parkway. The development to the south which includes CVS and Crust are not part of Pine Market, in fact, they were here long before Pine Market. The development west of Fish Creek including the car wash and Suburbs, is not part of Pine Market. The development north of the Woodforest entrance including McDonalds and the auto shop are also not part of Pine Market.
The land where Pine Market stands was owned by “Woodforest Partners LP” aka Johnson Development, the people who created the neighborhood. Over time, Johnson Development has sold off each piece to Realty One Partners who holds each property under various shell companies during development: “Pine Market Ph 1, LLC” developed Phase I of Pine Market which consists of Adventure Playcare and Wasabi; “Pine Market Ph 2, LLC” which developed Phase II including Wisters and WO Sushi; “Pine Market Ph 3, LLC” which developed the phase that includes Bespoke Cigars, Bemay Spa, Los Cucos, and the two currently half-built buildings; and most recently “Pine Market Ph 4, LLC” which is responsible for the two newest clearings where they intend to build more half-built buildings. But wait, there’s more! Phase 5 is scheduled to include at least 3 more buildings! For those of you keeping score at home, that’s a total of 22 buildings, over double the size of Market Street in The Woodlands.
But it doesn’t stop there. Once each phase is built out, Realty One’s shell companies then sell the phase to a new owner, and each phase to different owners. When you look at Pine Market today, there are 4 different, unrelated owners. Now, add in all the other buildings we already discussed aren’t consider Pine Market and you have a total of 8-10 different ownership groups running all the buildings you see at the intersection of Fish Creek and Woodforest Parkway.
Nothing. Johnson Development did not put many deed restrictions in place to control Realty One and force them into a cohesive tenant mix. They only dictated certain design restrictions to make the area look pretty. Worse, they then sold the other pieces of land to still more owners, again with no tenant mix restrictions. This is why you end up with Suburbs (a restaurant) in the middle of what was supposed to be a Medical District.
Without a deeded zoning plan, it is difficult for any tenant to get exclusivity in the area. And since the developing landlord, Realty One, is focused only on filling the spaces so they can immediately sell it off, you end up with a lot of duplications. At the time of writing there currently exists 4 Asian restaurants + 2 Boba Tea places, 4 gyms (including two pilates places opened nearly next door to each other), 2 liquor stores, 2 nail salons, 2 vets, 2 dentists, 2 pizza places, and 3 places to get ice cream with another on the way. One might think this is good for competition, but in an area this small, the more statistically likely scenario is it will eventually put them both out of business.
Realty One is not new at this. For decades they have developed projects just like this and sold them off. In fact, they've recently sold one such project in Houston and recently started another! This is all done using a construction loan from a bank or outside investors. When you get such a loan, the bank doesn't just hand you $50,000,000. Instead, they release these funds in draws as you prove you've completed a stage of the building process. This is why you'll see a clearing for a new building before the last one is complete. Realty One has run out of money to build, so they clear a new piece of land, show the bank they've started a new building, receive a draw, then use that draw to pay for the next stage on the previous building. Ideally, a developer never catches his own tail because the first buildings will have paying tenants before the loan comes due. But that's not happening. Why?
Local town centers like Pine Market usually start with mom-and-pop shops that are locally owned. These businesses are attracted to the perfect placement in front of their own communities, but rely on affordable pricing and aggressive signing incentives. Simply put, these small companies can't afford to be here.
Once town centers are established, they tend to attract more national tenants and high-end names. Before this can happen, a center must first prove it is busy and stable. Simply put, there currently does not exist a large enough population to support them.
All of this is predicated on having a cohesive, pre-planned tenant mix (which we've already established Pine Market does not have) AND having a landlord that is actively pursing new tenants.
At the time of writing, Realty One is still using outdated photos, plans, and narratives in their online postings, and these postings are posted in free sections with no advertisement dollars put behind them. They appear to be using only their own, in-house agents instead of hiring a proper commercial broker that would be actively talking to companies to attract them here. This is akin to putting up a "for sale by owner" sign in your yard. You may very well get some lookers who pass by, but without someone actively selling it, you're not really talking to anyone on the internet.
When it comes to rent in commercial spaces, you need to first understand that “rent” is a broad term that includes many things. As with most commercial spaces, rent at Pine Market is composed of a base rate + “pass throughs” also known as “triple net” (abbreviated NNN), or more commonly known in Pine Market as “CAM” (Common Area Maintenance). These additional items added to the base rent include: taxes, maintenance, and insurance but often also include administrative fees for running the complex and common area utilities.
The second thing you need to understand is that rent is calculated per square foot per year, meaning larger spaces pay proportionally larger rents compared to smaller spaces. So just because you know one tenant’s rent numbers does not mean you know the rates of other tenants.
PROBLEM #1: Commercial lease terms are usually 3-5 years long with regular increases over scheduled periods – this is info you know in advance. Businesses in Pine Market agreed to lease rates that were to reflect the growth of the center over time, but that growth never came – more buildings have been built, but there are hardly more businesses. In fact, for every 1 business that has opened in Pine Market in the past 18 months, another has closed resulting in a net zero change in number of businesses. The problem with this is that without other businesses, one’s own business doesn’t receive the increased foot traffic it projected. If there are no other reasons for people to come to the center, customers are less likely to see your business. Owners in Pine Market were promised a huge thriving center, but 4 years in and Pine Market is still failing to thrive.
PROBLEM #2: Increased CAM – Remember that second part to the rent structure? This is a fluctuating number and in the past year, it has gone wildly high. Let’s break it down:
1) As Realty One fills each building, they sell it off at an extreme premium which triggers a new assessment for property taxes – this bill is passed on to the unsuspecting business owners rather than being absorbed by Realty One at the sell
2) Insurance rates are out of control; you’ve probably already seen this on your own Homeowners and Auto policies in the past year. These costs are also passed on to the business owners.
3) Maintenance costs in Pine Market are (allegedly) extremely high. The landlord reports what they spent and then pass that cost onto the business owners as a part of the CAM which is added to monthly rent. Most businesses have the contractual right to audit their landlord’s books, but the landlords in each phase have refused (or otherwise failed to provide) actual documentation justifying how a new building could suddenly have hundreds of thousands of dollars of maintenance costs, especially when those buildings are leaking rainwater which has gone unaddressed – more on that later.
4) Realty One estimates the yearly CAM charges to add to your monthly rent, but their estimations were wildly off, meaning at the end of the year, a new assessment was issued to each business demanding payment for the shortage. These audits have stretched back to 2022. Because of Realty One’s poor accounting (or possibly their intentional deceit), businesses are forced to pay overages from 2022 and 2023 in addition to the revised, higher estimations for 2024. Some businesses have reported receiving assessments as high as $70,000 to be added to their regular, increasing rent! What business could absorb such an increase?! It begs the question, how does such an oversite from an experienced landlord even happen, and for so long? It is possible Realty One intentionally understated the cost of CAM to new tenants such to attract their business and then once the buildings were full, R1 sold the buildings triggering audits of the books which Realty One knew would result in shortages that would be pushed onto the tenants after they had safely sold the building, insulating themselves from the added cost.
When you combine these two problems together, you get a storm so fierce that no business, especially not any new business (big or small) could possibly withstand. This leaves a business with only a few choices:
1) Raise prices to cover the cost:
Woodforest Neighbors have been very vocal about stating they will absolutely not tolerate this option. In fact when Wisters increased their prices by $0.50 a burger, Facebook groups went nuts with complaints and people flocked to the newer “Suburbs” instead. This resulted in Wisters closing down just weeks later.
2) Absorb the cost, hunker down and hope for the best:
You can try to outrun the increases by paying for it, cutting out any profit (if applicable) and hoping new business increases fast enough to cover the new expenses. Adventure Playcare tried this, but just couldn’t get ahead after 4 years of attempts, they closed down recently as well.
3) Lawyer up, refuse to pay:
This is currently happening with several businesses in Pine Market, but even if they win, they still lose because they’ll be saddled with legal bills that will likely outweigh the money saved. In the meantime, the landlord will almost certainly file eviction notices due to the non-payment while under review.
LEAKS. Walk in to any business after a rain storm and see for yourself. Whether the building was built 4 years ago or just recently, they are all leaking rain water. Regardless of who owns it today, these were all built by Realty One who seem to be taking no responsibility for the faults. This leaves business owners with the additional, urgent task of constantly mopping floors, cutting out sheetrock, and replacing ceiling tiles just to keep their space dry so as to mitigate the possibility of mold! This is a problem that should always be handled by the building owner, so why are these businesses having to fight for this year after year? And at what cost to the business?
WINDOWS. Take a look at the newest buildings, do you notice how those large glass panes are fogged up when in direct sunlight? That isn’t dirty glass, those are blown gaskets in the double pane windows where the argon gas has leaked out, allowing the humid air to get between the glass panes. Not only does this entirely defeat the purpose of double pane windows, it is unsightly.
WALKWAYS. What in the world is going on with the concrete work? For an area with pretty flat topography, it’s shocking the site prep teams couldn’t create smoother transition points. Stairs lead to odd transitions with ramps which are up against unmarked ledges. Some places have handrails somewhat unnecessarily while others are suspiciously missing markings all together. As long as one is paying attention to where they step, it’s largely a moot point, but God help the elderly or those requiring ADA accessibility.
LIGHTING. If you spend any time around the new Pine Market Park (which was funded by your residential HOA dollars to the tune of $2.1M), you’ll notice the lighting between phases is not only different colors and designs, it seems to operate on/off at random. Some evenings in the park seem appropriately lit while other times it’s pitch dark. Some unoccupied buildings have lights while other occupied buildings have no lighting at all. Some streets and walkways have lights turning on unnecessarily an hour before sunset while others seem to come on far too late, or not at all. Combine this with the aforementioned walkway problems and you’ll hear reports of customers falling left and right. This is yet another issue that is the responsibility of Realty One, but ultimately is being erroneously blamed on the local business owner who has no control over the areas outside their own doors.
Though often incorrectly referred to as condos, the areas above the new retail spaces are apartments for rent. These spaces start at 500sq’ studios with no walls for $1400/mo and go up to two bedrooms with 1200sq’ for $3200! For that price you could overpay for a home in Woodforest with a terrible interest rate and no money down. Complicating the issue is that they are currently only open to people 55 years old and up. But why? They contain no amenities and no covered parking. If you want to create a walkable town center, why not target DINKs (dual income no kids) who would gladly park in the rear lot in exchange for being able to walk to their favorite sushi spot or grocery store. These apartments have been available for rent for months now and so far not one single unit has been taken. Don’t be fooled by the lights on in some locations, these are staged apartments for show on tours.
Almost every business in Pine Market is owned by a local resident who has invested their lives’ savings into building out the space you see. Remember, when you walk into a space, the landlord didn’t build that, they only built the building, the business owner paid for everything else, including the electricity and plumbing. Even the simplest designs cost the business owner $150,000 to build out, with an average being closer to $300,000, restaurants likely exceeding $1M in build-out costs alone.
When you complain about a business on Facebook, you are throwing stones at your own neighbor who gave up everything to try to get that business off the ground while silently fighting all these hidden battles with their landlord. Let’s face it, Woodforest has a reputation for being very critical, so it’s a slippery slope for a business owner to even make a comment on Facebook, much less start complaining. And if they did complain, how confident would you be in giving that business your money? And if outside businesses heard those complaints, how confident would they be in coming to Pine Market and filling these empty spaces. So then, these struggling business owners, our own friends and neighbors, have no choice but to fight these fights silently and pray for the best while Realty One sells new business owners on the big lie. With any luck, more businesses will come, driving more traffic, and the lie will become a realty before it sinks more family inheritances.
A basic Economy 101 class will show you that the supply of commercial spaces has outpaced the demand. Right now, Pine Market is far too large (and too expensive) for the community it is within. Woodforest has only 5,500 homes which represents about half of the total population of Fish Creek from 105 to 1488. While there are some apartments, townhouses, and a few more single-family developments planned, it's not much more relative population.
If Realty One continues to build, continues to fail to attract new tenants, and doesn't start incentivizing the current tenants to stay, the center will go belly up before any increased demand ever arrives. The result is "Spirit Halloween" stores, vacancies, and "everything must go" sales which will ultimately cause home values in Woodforest to plumet.
Pine Market is absolutely beautiful and has amazing potential, but that might not be fully realized for many years from now. It's imperative that we work to keep every business we already have until then! The success of current businesses is what will attract more.
SHOP LOCALLY. There is a common misunderstanding that these businesses are more expensive than their competition in The Woodlands or Conroe, but is that really true? And even if a burger were a buck more, is it really worth it to drive to another community to save that dollar?
PRAISE PUBLICALLY by writing five-star reviews on Google Maps, tag businesses on social media like Facebook and Instagram, like and share their posts, and tell your friends about them.
CRITICIZE PRIVATELY if you have a bad experience rather than putting them on blast online. For most businesses, the owner (who is your neighbor) is present 95% of the time, ask to speak with them and privately share your experience.
SHOW UP to events that businesses host and bring guests. Even when you don’t make a purchase, sometimes the very act of being present not only helps validate the owners’ hard work, but it helps draw attention that may in turn attract new customers.
CONTACT YOUR HOA at The Palm. That office oversees not only the Residential HOA, but the Commercial HOA. Unlike the residential side, the commercial HOA has very little power to make any enforcements and zero power to control the landlords, but they are employed by Johnson Development who is large enough to put other pressures on the landlords that could inspire change. Right now, Johnson Development takes no responsibility and is doing everything they can to distance themselves from the train wreck. But if they don’t step up and try to make it right, Pine Market will fail causing massive declines in home values. (Have you noticed this year that your home’s value has not increased like your friends in The Woodlands?)
CONTACT REALTY ONE by visiting their leasing office in Pine Market: 900 New Day Ave, Ste 550 (across from Bemay Salon). Share your feedback and concerns with them. While the person sitting in this office is not the person who made these decisions, he or she works for the person that did. Hold them accountable and ask how you can escalate your concerns.
Realty One Partners is located at 6510 FM359 #100, Fulshear, TX 77441. This is where the leadership team is physically located daily. The owner’s name is Beau Evans, his email address is: evans@r1partners.com
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