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Finally Some Rent Gains

Finally Some Rent Gains

After constant decline since 2008, retail rents are on the rise.CoStars April stats show 1.2% rent growth here, the 11th-highest nationwide. (Does this mean Blockbuster is going to reopen? We still have a copy of Fast and Furious 4 that we need to return.)

Costar Ryan and Paul

CoStar retail economist Paul Leonard (right, with colleague Ryan McCollough) tells us rents declined 12% in Houston between 06 and Q4 12, dropping our rates from $16.13 to $14.16. Besides the general economic downturn, thats partially thanks to 25M SF coming online between 2007 and 2010. Thats been hard to recover from, and Paul says gains have been surprisingly slow to materialize given our great economy recently. (Not to mention our absorptionweve dropped from 7% vacancy to 5.5%.) But theres good news, we can expect this upward trajectory to continue... and explode.

shopping mall

Paul predicts Houston will see50% more demand than the national average. Since theres little under construction now, he expects very strong rent increases for the next two years. Once development picks up (CoStar forecasts 18M SF delivered between 2015 and 2017), thatll even off. Paul foresees an average 3.6% growth annually for the next five years, a bit above the national estimate of 3.2%.

Related Topics: Paul Leonard