Houston’s retail market posted its best overall occupancy rate in years, with only 4 % of the market’s 150 million square feet vacant.
Five key things to know about the market follow below:
1. The rapid drop in the price of oil is leading some to question whether the market can maintain that high level of occupancy in 2015. However, the economy today is far less dependent on energy than in the 1980s, so the impact should be lessened, and lower gas prices are increasing consumers’ disposable income.
2. The market is growing, with 157,000 new residents last year, and the metro area population now totals around 6.6 million. During the 12 months from March 2014 to March 2015, the Houston area added 82,500 net new jobs.
3. Even as the market tightens, the new construction remains constrained by historical standards. During 2014, the market added just 1.7 million square feet, and 2015 is on track to see that total exceeded, but not by a significant amount. New space this year is coming from Whole Foods, Sprouts, LA Fitness, Costco, Cabela’s, Walmart Neighborhood Market, Fiesta Mart and others.
4. Malls are big in Houston. Houston has the distinction of seeing two major mall expansions in the works at a time when enclosed-mall construction nationwide is all but dormant. This year will see a 555,000-square-foot expansion of Baybrook Mall and the expansion of leading mall The Galleria, including redeveloped space created when Saks relocated to a new space within the malls, as well as a new multi-family tower. Houston is also seeing some large mixed-use projects, including CityPlace, a north Houston project designed to have a mix of uses, including 400,000 square feet of retail, upon completion.
5. The 2016 market is already coming into shape. For example, Kroger Marketplace just broke ground on a 123,000-square-foot store in Clute, and more new retail is coming from H-E-B and other anchors. [ The Weitzman Group]