Houston Welcomes New Tenants to the Market
Houston’s retail market continued to improve through the fourth quarter of 2010 with positive net absorption and lower vacancy rates. For the past six quarters, Houston’s retail market has posted positive net absorption. Retail vacancy rates for all product types stood at 8.1%, down from 9.9% at this time last year. Developers have curtailed development, delivering less than 350,000 SF of new retail space in the fourth quarter – compared to over 850,000 SF in the fourth quarter last year – and kept the construction pipeline nearly empty with less than 120,000 SF in retail projects under construction compared to 240,000 SF one year ago. Overall, the local market is performing well under less than optimal economic conditions, namely sluggish job growth and low consumer spending levels.
Macro factors driving the absorption of retail space ultimately tie back to the job count. According to the Texas Labor Market Review, total nonagricultural employment in Texas rose by 19,100 jobs in November, gaining jobs in eight out of the last eleven months. At the local level, Houston’s MSA had the largest monthly job increase, with 10,900 jobs added in November. Dallas followed with 5,200 jobs added. Houston also led in the monthly growth of retail and government jobs, adding 7,400 and 2,300 jobs, respectively.
Houston’s above-average population growth is expected to reach 9.5 million by 2035, led by strong growth in suburban Fort Bend and Montgomery counties. Houston’s diverse population spanning all economic brackets continues to be a strong draw for retailers. Several companies that have recently expanded into the Houston retail market include Carl’s Jr, Jimmy Changas and Saucyritos. Carl’s Jr plans to open 40 new locations in the Houston area. Existing retailers such as Target and Whole Foods plan to expand their presence in the market by opening new locations or remodeling current locations to include new concepts. Houston’s strong long-term outlook is expected to continue attracting retailers seeking to expand market share in one of the fastest growing metropolitan areas in the U.S.
Please click here to download a PDF copy of the Q4 Houston Retail Market Research & Forecast Report.