Houston’s Strong Economy Helps Push Retail Vacancy Rates to Historic Lows
Houston’s retail market posted 1.2M SF of positive net absorption in the fourth quarter, bringing the years total to 3.0M SF. Some of the tenants who opened new locations during the fourth quarter include Wel-Farm Supermarket, Aldi, PetSmart, and CVS.
254,000 SF of new retail space delivered during the fourth quarter bringing the average citywide vacancy to 6.6%, which is 40 basis points lower than last quarter’s 7.0% vacancy rate. Currently, there is 947,000 SF in Houston’s retail construction pipeline, which includes a 71,400-SF Whole Foods Market located in Vintage Marketplace and a 53,000-SF Top Golf USA located on Spring Park Center Blvd, just east of I-45 N.
The citywide average quoted rental rates for all property types increased 0.7% between quarters from $14.63 to $14.73 per SF. Since Q4 2012, average rental rates have increased 2.7% from $14.32 to $14.73. Houston retail rental rates vary widely from $10.00 to $70.00 per square foot, depending on location, property type, and building class.
The Houston metropolitan area added 86,200 jobs between November 2012 and November 2013, an annual increase of 3.1% over the prior year’s job growth. Local economists have forecasted 2014 job growth to remain steady, adding between 68,000 and 72,000 jobs. Further, Houston’s unemployment fell to 5.6% from 5.8% one year ago. Houston area home sales increased 19.4% between November 2012 and November 2013.
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