Retail's Flashy Q1
Houston retail occupancy remains at historically high levels, so it won’t surprise anyone to hear our rents are also breaking records. (You mean there are people who are more concerned with the price of the store than the prices in the store?)
CBRE Texas director of research Sara Rutledge (here with husband Bill and son Dylan) tells us retail occupancy reached 92.7% in Q1, a 50 bps improvement from one year ago. (Retail vacancy is tighter than all those clothes we've been trying on since we learned how to make cheescake.) Net absorption accelerated over the quarter to more than 660k SF, but development remains at less than 25% of the last cycle. (Only two new grocery stores opened: Walmart’s second Inner Loop location, and a Kroger Marketplace at Kuykendahl and West Rayford.) Combine those with record local retail sales (we topped $25B last year for the first time), and landlords are sitting pretty.
That’s pushed asking rents to nearly $22/SF across the metro, Sara says. That's a new peak for us, and a nice increase from $19.37 one year ago. The Inner Loop and northwest areas inside the Beltway are seeing particularly tight fundamentals, and are also hotspots for retail development. And of course, the area surrounding Exxon’s campus is particularly active, including construction on an HEB anchoring Creekside Park Village and a Whole Foods in Hughes Landing (rendered above).
