Houston Retail Surge 🚀🛍️

Houston Retail: Q2 Highlights 🌟📊

Bill Rapp, Commercial Mortgage Broker
August 02, 2024•3 min read

Houston Retail: Q2 Highlights 🌟📊

Houston Retail Surge 🚀🛍️

Hey everyone! Welcome back to our blog! Today, we're diving into the Q2 2024 Houston retail market report, which brings some significant updates and challenges worth discussing. 🌟📊

A New Approach to Reporting

First off, there's a notable change in how Colliers reports retail market statistics. They now include data on all retail properties that are 5,000 square feet or larger. This shift means making direct comparisons to previous reports is a bit tricky. However, it gives us a more comprehensive view of the current market landscape. 📈🏢

Strong Fundamentals Driving Growth

Houston's retail sector had a robust second quarter. The key takeaway? Demand is outpacing supply, resulting in low vacancy and availability rates. With fewer options available, retailers are finding it harder to secure spaces. Meanwhile, Houston's growing population is driving consumer spending, which is a positive sign for the market. 🛍️🏃‍♀️

Houston Highlights

  • Vacancy Rate: Slight dip to 5.2% from 5.3% last quarter. 📉

  • Demand: Soared to 787,531 square feet, up 20.9% year over year. 🚀

  • Net Absorption: Outpaced new supply at 582,772 square feet. 📦

  • Top Submarkets: Northwest led with 554,472 square feet absorbed and 339,370 square feet delivered. 🌆

  • Leasing Activity: At 2.1 million square feet, consistent with last quarter but 18.2% higher year over year. 📝

  • Construction Pipeline: At 2.7 million square feet, down 23.9% year over year. 🚧

  • Rental Rates: Averaged $20.38, a 3.2% increase year over year despite a drop from the previous quarter. 💸

Vacancy rates have remained steady between 5.0% and 5.3% since 2022. Net absorption bounced back this quarter, surpassing new supply for the first time since Q2 2022. However, new supply remains limited, with this quarter's 562,772 square feet being 43.8% less than the average over the past 12 months. Sublease space also continues to decline, dropping 24.0% year over year to 467,114 square feet. 🔄

Impact of Hurricane Beryl

Hurricane Beryl had a significant impact on over 2 million Houston residents and businesses, leaving many without power for days. Houston's restaurant sector was particularly hard hit. Local operators suffered property and equipment damage, lost a week’s revenue, faced perishable food losses, and saw income losses for staff. 🌪️💡

Some restaurants, like the local Thai eatery Street to Kitchen, managed to serve customers with limited menus and minimal staff by operating on generators. Others, like Craft Pita, saw an influx of customers once power was restored. Rafael Nasr, owner of Craft Pita, noted, "Tuesday was the busiest lunch service so far this summer. For a few hours, there were no empty tables." Despite this, the long-term impact on these businesses remains a concern. 🍽️💬

Looking Forward

Houston's restaurant community, despite temporary boosts in sales, faces ongoing challenges due to power outages and slow summer sales. Many operators are now looking to landlords for support, such as rent grace periods or other concessions, to mitigate their losses. The resilience of Houston's businesses in the face of such challenges is commendable, but the road to recovery will be a tough one. 💪🏽🏙️

Thanks for tuning in to our market update! Stay resilient, Houston, and we'll catch you next time with more insights and updates. 📰✨

#HoustonRetail #MarketUpdate #HurricaneBeryl #RetailGrowth #HoustonStrong #CommercialRealEstate #RetailTrends #LocalBusiness #CommunityResilience

I’m an experienced Commercial Real Estate Mortgage Broker, please feel free to reach me at 281-222-0433.

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Bill Rapp - Commercial & Residential Mortgage Broker

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