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Quarterly Update: Retail Market

Published on 1/17/24


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Retail remains the healthiest of Houston’s commercial real estate markets. Vacancy rates have fallen. Merchants continue to absorb space. Rents remain elevated. And overbuilding is not a concern.

Vacancy rates have trended down since the economy reopened in the early summer of ’20. Though rates recently ticked up from a low of 4.9 percent in Q3/22, they remain well below historic averages. Robust population growth and a return to conventional, in-person shopping is driving the demand for retail space. 

The market has absorbed 3.8 million square feet of retail space over the past 12 months and 1.4 million in the most recent quarter. 

At the end of Q4/23, total space being marketed (e.g., vacant, occupied yet available, available for sublease, or available at a future date) was 23.1 million square feet. That compares to 23.5 million square feet in Q3/23 and 22.3 million in Q4/22.

Retail construction is holding steady despite higher interest rates and tougher lending standards. As of Q4/23, Houston had 3.3 million square feet of retail space underway. Strong population and job growth support the need for additional retail space.

Rents remain elevated. The average was $20.32/sq. ft./year at the end of Q4/23. That is up from $19.47 the same quarter a year ago, $18.92 two years ago, and $18.22 in Q4/20. The rates quoted are triple net (NNN) where the tenant is responsible for all expenses associated with their share of building occupancy, i.e., taxes, maintenance, utilities, security, etc.

Prepared by Greater Houston Partnership Research

Patrick Jankowski, CERP
Chief Economist
Senior Vice President, Research

Leta Wauson
Research Director


Digital Technology Key Economic Indicators
3.8 million square feet

Retail market has absorbed 3.8 million sq. ft. over the past 12 months.

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