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With H-E-B Anchoring Away, Houston Retail Occupancy Rate Hit 95% In 2019

Grocer H-E-B built seven 90K-plus SF Houston-area stores last year, making it the metro's most active retail anchor in terms of construction activity, a new report from Weitzman said Tuesday. 

A rendering of the H-E-B store on North MacGregor Way in Houston

Despite H-E-B's development frenzy last year, Houston retail construction fell from 2.7M SF in 2018 to 1.6M SF overall in 2019, the report said.

With less new space coming online, the market remained healthy with a year-end occupancy rate of 95% and steady demand for retail space across the metro.

While the closings of Sears and Toys R Us pushed Houston's occupancy rate down to 94% in 2018, the metro survived 2019 without the loss of major retailers, allowing its occupancy rate to edge up. 

Retail rental rates also remained robust in 2019, with dense urban areas in particular seeing rent increases. Class-A space inside the Loop tied to affluent markets and inside newly constructed space is leasing for as much as $50 to $70 per SF, the Weitzman report said. 

Heading into 2020, retail activity is expected to remain strong in Houston, with the area benefiting from ongoing population and economic growth, Weitzman concluded. 

The company expects robust demand in 2020 with the only difficulties occurring in dated product or less strategically located submarkets.