Houston's Record-Breaking Retail Boom May Be Fading

Houston retail strip center
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Houston's retail market closed the year with the highest net absorption on record — over 4M SF. In Q4 2016, the retail market absorbed 1.3M SF. Recent data from CBRE shows that while the fundamentals are strong, some uncertainty is building. Average occupancy stayed flat at 94.3% in Q4 2016 due to several national big-box bankruptcies/mergers and vacant space in new deliveries. Citywide, 1.6M SF is under construction with 2.6M SF anticipated to begin in 2017. The most recent sales tax data from October shows a continuing decline in retail business spending in the Houston MSA, with collections down 2.3%. The strongest spending declines were recorded in home furnishings, general merchandise and electronics/appliances. As net migrations taper, demand and construction levels could moderate in 2017.

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