Here Are 4 Things To Know About Houston's Tight Retail Market
The quarterly retail report from NAI Partners released Monday shows an increase in overall asking rents in Houston. The overall asking triple net rent improved to $17.15 in the third quarter, outpacing the previous quarter's all-time high. The overall vacancy stands at 5.4%, unchanged from the previous quarter and year over year.
Bisnow has outlined the major takeaways from the report:
1. Houston's retail asking rents keep climbing
The overall retail average asking rates grew by $0.23/SF quarter over quarter to finish at $17.15. That was a 5.3% increase from a year ago when average rents were at $16.29.
The retail market also noted a slight decrease in overall retail vacancy to 5.4% in the third quarter. By the end of the quarter, net absorption rose over 225% to 1.4M SF, which is a leap from 440K SF net absorption the previous year and 75% higher than the year-over-year absorption of 820K SF.
2. Economy on a healthy track
Employment citywide increased by 3.1% in August. The construction industry led the way with about 21,000 new jobs. Professional and business services followed by adding 16,800 jobs. The unemployment rate dropped slightly to 4.2% in October, the lowest seasonally adjusted unemployment rate for Houston since February 2008.
3. Supply and demand remain aligned
In each quarter of 2017, deliveries outpaced absorption, signaling slower tenant demand for new space. Construction slowed to an average of 4.5M SF during the same period.
This trend continues this year as Houston absorbed 1.4M SF and delivered 1.5M SF in the third quarter. The fundamentals remain strong with occupancy at 94.6%. Occupancy has remained at or above 94% since Q4 2013.
"This controlled approach will support steady retail growth going forward in a challenging national retail market," NAI Partners Director of Research Leta Wauson wrote in the report.
Houston has 4.3M SF of retail under construction currently, which is slightly down from 5M SF the previous quarter and 4.6M SF a year ago. New development has dropped on a quarterly basis since the first half of 2017, when it reached a five-year high of 5.4M SF.
4. Port Houston makes top 5 U.S. container ports
Port Houston climbs to the top 5 for containers alongside the ports of Los Angeles, New York, Savannah and Long Beach, according to JOC Piers data for Q2 2018. Backed by strong imports, the Houston port is outpacing trade for the U.S. as a whole this year. Imports from the Trans-Pacific region skyrocketed by 24% during the first six months of 2018 compared to only 5% overall in the U.S.
