Q4 2016 Houston Retail Market Report

Houston’s retail market remains strong and moves into 2017 with a healthy outlook 

Houston’s retail market ends 2016 on a positive note and moves into 2017 as the healthiest commercial real estate sector in the metro.  The average vacancy rate remained unchanged at 5.8% on an annual basis and only increased 10 basis point on a quarterly basis from 5.7% in Q3 2016.  Although Houston lost about 80,000 high income jobs between 2014 and 2016,  retail market indicators show no signs of a struggling economy.  According to our data provider, CoStar Property, Houston ranks fourth nationally in construction activity.  Approximately 74.6% of the retail space under construction at the close of Q4 2016 is pre-leased.  Despite the 1.3M SF of new inventory delivered in Q4 2016, Houston’s average retail vacancy rate remains low at 5.8%, only 10 basis points higher than the 5.7% recorded in the previous quarter. 

Houston’s retail leasing activity, which includes renewals, decreased over the quarter from 1.4M SF in Q3 2016 to 1.1M SF.  2016 year-end leasing activity was actually more than the previous year, with 6.2M SF compared to 5.7M SF in 2015.   

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