HOUSTON – Houston’s market for retail real estate is exceptionally strong with declining vacancies and rising rents.
Colliers International reported Houston’s retail market posted 573,000 SF of positive net absorption in the first quarter. Some of the tenants who opened new locations during the quarter include Whole Foods Market, Spec’s, Rue21, Sears Outlet Center, Jack’s Carpet, and Mattress One.
The average citywide vacancy declined to 6.6 percent in the first quarter, an improvement from 7 percent in the first quarter of last year, Colliers reported.
Colliers reported the citywide average quoted rental rate for all property types increased 0.3% from $14.69 to $14.73 per SF between quarters and 0.1% from $14.71 in Q1 2013. .
Rents are impressively strong in the River Oaks District, a mixed use project being developed by Oliver McMillan on Westheimer Road, said Matt Keener, senior vice president of retail in CBRE’s Houston office. The developers are quoting 150 per sf rents in the River Oaks District, which is comparable to high-end space in the Galleria, Keener told the CBRE Press Luncheon last week.
“I’ve been in the business 20 years and this is the strongest landlord market I’ve ever seen,” Keener said. “We are seeing rapidly escalating rents.”
Black clouds on the horizon: Radio Shack and Staples are expected to close stores and stores such as Best Buy are shrinking their stores, opting to go with 25,000-square-foot stores instead of 45,0000-sf in the past, Keener said.