Q3 2014 Houston Retail Market Research & Forecast Report
Houston’s Retail Vacancy Rate Drops to 6.1%
Houston’s retail market posted 1.0M SF of positive net absorption in the third quarter. Some of the tenants who opened new locations during the quarter include Wal-Mart, Floor & Décor Outlets of America, Altitude, Bravo Ranch Supermarket, Petco Unleashed, Robyn’s Nest Boutique, and Best Friends Total Pet Care.
The average citywide vacancy rate fell 10 basis points between quarters from 6.2% to 6.1%, and by 80 basis points over the year from 6.9%. Currently, there is 1.8M SF in Houston’s retail construction pipeline, which includes a 124,000-SF Kroger Marketplace located at the corner of Spring Green Boulevard and FM 1463 and a 63,000-SF Fiesta Mart located at FM 529 and Fry Road.
The citywide average quoted rental rate for all property types decreased 0.1% from $15.14 to $15.12 per SF between quarters and increased 3.1% from $14.67 in Q3 2013. Class A retail rental rates vary widely from $20.00 to $85.00 per SF, depending on location, property type, and building class. New construction rates start in the low $40.00’s per SF, driven by higher land and construction costs.
The Houston metropolitan area created 107,400 jobs between August 2013 and August 2014, an annual increase of 3.9% over the prior year’s job growth. Sectors creating the most jobs included professional, scientific, and technical services, health care and social assistance, and accommodation and food services. Houston’s unemployment rate fell to 5.4% from 6.3% one year ago.