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Local Leasing Buoys Houston Amid Nationwide Retail Closures

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Toys R Us

While 2018 has already been another rough year for retailers nationwide, Houston is resisting the trend. Houston's tightening retail market, strong net absorption and heavy pre-leasing deliveries registered 94.4% occupancy in Q1, solidly above Houston's eight-year average of 93%, according to the latest data from CBRE. 

Many occupiers and investors have adopted a wait-and-see attitude, allowing the dust to settle following several national big-box bankruptcies and e-commerce shakeups. As such, leasing activity was below the long-term average of 1.8M SF, with 1.4M SF of deals transacted in the first quarter. Discount retailers like Dirt Cheap and Ollie’s Bargain Outlet are gaining footholds in the Houston area, potentially taking advantage of recent big-box vacancies, JLL reports.

Big-box grocers continue to have success in the metro, aggressively growing both traditional-footprint stores, as well as e-commerce and curbside options. With H-E-B’s six planned locations for 2018 and more announced for 2019, it is poised to be another banner year for the grocery sector.

Rising land and construction costs may lead to competition in tighter urban submarkets, while new projects continue to spring up along the north section of the Grand Parkway in suburban Houston. Looking ahead, the metro’s retail market is expected to remain stable and healthy, with moderate growth projected for 2018.

Related Topics: JLL, CBRE Houston