Latest Insights

The Houston retail market ended 4Q25 in a stable position, supported by limited new supply and steady demand for well-located properties. The vacancy rate remained close to 5.2%, while construction activity declined significantly, with 450,000 SF delivered in the quarter and approximately 2.6 million SF completed for the year, which is well below recent averages. Net absorption remained positive at just over 500,000 SF, although leasing activity slowed as retailers grew more selective amid economic uncertainty. Asking rents rose slightly to approximately $24.57 PSF NNN, driven by limited supply and continued demand from essential and service-oriented retail. Overall, market fundamentals suggest a stable outlook, particularly for high-quality centers with strong tenant mixes.

The Houston retail market continued to perform steadily in 3Q25, supported by ongoing population growth and consistent consumer activity. Vacancy remained in the mid-5% range, signaling balanced supply and demand, while net absorption exceeded 800,000 SF for the quarter. New construction deliveries slowed to approximately 700,000 SF and the development pipeline contracted, helping preserve occupancy and mitigate oversupply concerns. Asking rents held firm on average at $24 pSF NNN throughout the Houston region, with modern, well-located centers commanding premium rates. Overall, Houston's retail sector remains well-positioned, driven by strong leasing momentum, disciplined development, and resilient consumer fundamentals.

Houston's retail construction pipeline remains robust, with approximately 3.4 million SF under development, primarily in the Far Northwest (Cypress, Bridgeland, Tomball and Magnolia), Far North (Conroe, Huntsville, Willis, and New Waverly), and Katy areas, driving an increase in upcoming supply. However, in 2Q25, a lack of absorption led to a 10-basis point rise in the overall vacancy rate, from 5.4% to 5.5%. This slight increase in vacancy is due to new spaces being filled by new construction rather than the absorption of existing vacancies. While supply and demand had been in close balance in recent quarters, with most of the net absorption going into newly delivered properties, the market is now adjusting as retailers take a more cautious approach amid economic uncertainties. As tenant absorption lags behind the influx of new space, vacancy rates are rising, suggesting potential shifts in leasing strategies and tenant demand moving forward.