Latest Quarterly Snapshot

The Houston retail market continues to be durable with vacancy and availability rates remaining below the 5-year average. Therefore, demand has outpaced supply over the past five quarters. Demand surged to 787,531 SF, marking a 20.9% increase compared to the previous year. Net absorption, at 582,772 SF, outpaced the introduction of new supply, highlighting a market where occupancy is growing faster than new space is being made available. Overall, the retail market remains strong with high demand, which should continue for the next few quarters.

Houston's retail market is making waves nationally in 2024, ranking third for the addition of new retail space. With a pre-leasing rate surpassing 70%, Houston is on track to outpace new supply with net absorption. This positions the metro to be the largest in the U.S. to see a reduction in retail space availability this year, driven primarily by the performance of its eastern half. Furthermore, the availability rate for smaller freestanding properties, specifically those under 5,000 square feet, stands at just 3.5% in 1Q24.

The Houston Retail market continues to be the healthiest of Houstona€™s commercial real estate markets. The overall vacancy rate has remained steady quarter to quarter, ranging from 4.8% to 5.1%. Additionally, as of 4Q23, Houston recorded a total absorption of 2.8 million SF over the past 12 months. This absorption was predominantly concentrated in the general retail sector (1.8 million SF) and neighborhood center segment (120,000 SF). Because of this, Houston secured the second position nationally in terms of new demand during this period. As the year progresses, we should see more space being absorbed and demand continue to heighten.