CBRE's Q1 retail sector performance report came out yesterday and it painted a very rosy picture. There’s 2.2M SF of retail space under construction around Houston, 35% of which is grocery-anchored centers. After 36 months of growing demand stifled by limited supply, new construction is finally starting to deliver almost completely full buildings. Q1 completions were 96.4% occupied upon delivery.
Houston absorbed 461k SF in Q1 2016 with the strongest activity in the far north and northwest submarkets. Demand continues to outpace supply, pushing occupancy up to 93.8%, with Class-A product even higher at 97.7%.
Retailers are still playing catch-up with Houston’s post-recession population boom. There is some concern over slowing national retail activity. Sales tax revenues have been declining for several quarters across Houston, yet there's no observable decline in retail leasing demand.
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