Retail Activity Bucks Metro Trends

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July 27, 2016

By: Mark Raines, Senior Vice President, JLL Houston Retail Lead

retail activity

Undeterred by low oil prices, development and leasing activity within Houston’s retail sector remain strong through mid-year.

With more than 3.6 million square feet of space under construction in the second quarter, Houston leads the nation in retail development activity. Strong demand for new retail space led to the highest quarter for deliveries since 2009. Grocery-anchored centers consistently made headlines as major stores like HEB, Kroger and Wal-Mart compete for market share.

Total vacancy in the second quarter tied its record low from 2015 at 5.2 percent and total availability dropped thirty basis points quarter-over-quarter to 7.1 percent. Houston’s retail vacancy stands in stark contrast to the city’s office market, which reached a total vacancy of 18.5 percent in the second quarter.

Not only is Houston retail activity booming, it’s exploring new dimensions with unique vertical concept developments. HEB is breaking ground on its first two-story location in Houston in 2017 and Gulf Coast Commercial Group has cleared an industrial site in The Heights area with plans for a retail center with multi-level anchors. General market tightness will likely drive retailers and developers to continue exploring new options in the Houston market.

While land sites in the urban core are limited, the expansion of the Grand Parkway is opening new suburban corridors. This has created opportunities for flourishing fast casual concepts to enter and expand across the metro. Food and beverage is busier than ever, and fast casual retailers like Pollo Campero, Verts Mediterranean Grill and Mama Fu’s Asian House are capitalizing on the current market environment.

Strong population growth and household formation should continue to drive Houston retail development and leasing activity through 2016.

View complete Q2 2016 Houston Retail Insight & Statistics

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Mark Raines color webAbout the Author

Mark Raines is a Senior Vice President and the Retail Brokerage lead for JLL Houston. In his role, Mark focuses on delivering strategic and innovative real estate solutions that produce superior results and create exceptional value for clients. Mark has more than 15 years of commercial real estate experience and is a member of the International Council of Shopping Centers (ICSC).

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