Markets & Economy

Houston economy slowing, opening up more retail space

Declining oil economy results in negative absorption in commercial space
  • Houston currently holds 16.65 square feet of vacant retail space.
  • Construction still booming with 3.7 million square feet underway.
  • Leasing activity dropped 6.2 percent quarter-over-quarter.

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Houston’s economy, largely dependent on oil, is seeing dips as the primary source of revenue drops and countless energy jobs are eliminated, according to the Colliers International Q1 Houston Retail report. While the expanding retail market continues to add more space with 3.7 million square feet under construction (81.5 percent of which is pre-leased) big brand tenants are relocating. Sports Authority, Aeropostale and Fresh Market have announced their departures, causing Houston to reach negative absorption of 200,000 square feet. Although not a major impact in a vacuum, Houston hasn’t hit negative absorption rates since 2009. According to CoStar, Houston's average retail rent rate fell 3.6 percent, from $15.19 to $13.65 per square foot NNN -- or triple net, which means property tax, insurance and maintenance are covered by tenant. On an annual level, rents dipped 2.1 percent from a prior $14.95 per square foot NNN.  New construction still in the pipeline At the ...