July 25, 2017
With a maturing demand cycle and almost 4.1 million square feet of space under construction, Houston’s retail landscape is stabilizing from the record-setting pace of the last several quarters.
Pent-up demand from years of strong population growth and muted retail construction have driven rapid retail development and red hot leasing activity for the last several quarters, leading to three consecutive quarters of well over a million square feet of positive net absorption in 2016. As supply begins to satiate demand, Houston’s retail market has seen two quarters of more sustainable positive net absorption at 628,160 and 873,084 square feet in the first and second quarters of 2017, respectively.
Despite a maturing growth cycle, fundamentals still indicate a very healthy Houston retail market moving forward.
The fast casual sector continues to see rapid growth thanks to Houston’s diverse and growing population. Concepts such as Zoe’s Kitchen, Mod Pizza, Slim Chickens, and Mama Fu’s among others, have all been in expansion mode or have announced plans to expand further in Houston in the near future.
Retail has maintained its strength across the metro thanks in large part to the ongoing expansion of the Grand Parkway, a planned 184-mile loop circling the Houston metro, which has more than 70 miles completed. As sections of the Grand Parkway open, so too do new retail corridors. Currently, 40 percent, or approximately 1.5 million square feet, of Houston’s retail construction is within 1.5 miles of the major highway.
We can expect to see the construction pipeline decrease and vacancy increase slightly as projects deliver and Houston’s retail cycle matures. Overall, however, healthy demand will lead to strong leasing activity and positive net absorption throughout the rest of the year.
Click below for our full Q2 retail market insight and statistics.
About 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).