HOUSTON – (By Kyle Hagerty for Realty News Report) – Houston’s retail real estate sector may be as strong as it has ever been.
CBRE reports 2019 was one of the strongest years on record for Houston’s retail real estate market, with occupancy remaining high, despite robust new construction. About 4.4 million SF of new retail-space was delivered in 2019, while occupancy total 94.1 percent, CBRE reported. The construction totals were boosted by H-E-B’s addition of four new grocery stores at year-end.
With annual absorption over 3 million SF, rental rates remain strong. Demand is high for prime locations and excellent retail corners. Inside the loop, where land is the most expensive, retail rents are averaging $42 per SF, CBRE reports.
“Higher land prices and construction costs are requiring developers to push rents,” said CBRE Vice President Robbie Kilcrease said at a recent press luncheon in Houston.
Houston’s rapid growth is driving up land prices in nearly every corner of the metro.
“You’d think a market this full would attract more construction, we don’t have a ton of retail centers, but land costs have gotten out ahead of rents,” Kilcrease explained.
Houston’s robust retail sector is being driven by yet another year of outstanding home sales. Houston home sales hit a record high in 2019 with 86,205 single-family home sales, up 4.8 percent from 2018, the Houston Association of Realtors reported. For the year, the single-family median home price was $245,000, up 3.2 percent from the 2018 median of $237,500, according to the association.
Metro Houston ranks alongside Dallas as the top two new home construction markets in the nation. The CoreLogic firm is projecting some 30,000 new home starts in Houston in 2020, again placing Houston as one of the best home construction markets in the nation.
Houston added over 80,000 jobs in 2019, according to preliminary reports, which are expected to be revised downward. Even with the revisions, job growth was still impressive in 2019 – one of the best cities in the nation.
Houston’s retail outlook looks promising in 2020. With the region predicted to create roughly 43,000 jobs (some forecasters predict around 60,000 new jobs) both rooftops and retail will continue to expand, extending retail’s 128-month bull run.