Houston Retail Real Estate: Strong in 2019 — What to Expect in 2020
Robbie Kilcrease
HOUSTON – (By Kyle Hagerty for Realty News Report) – Houston’s retail real estate market appears to be as strong as it has ever been.
CBRE reported that 2019 was among the strongest years on record for Houston retail, with occupancy remaining high despite substantial new construction. Approximately 4.4 million square feet of new retail space was delivered in 2019, while overall occupancy stood at 94.1 percent, according to CBRE. The year’s construction totals were boosted by H-E-B’s opening of four new grocery stores late in the year.
With annual absorption exceeding 3 million square feet, rental rates remain robust. Demand is high for prime locations and quality retail corners. Inside the loop, where land costs are highest, retail rents are averaging about $42 per square foot, CBRE noted.
“Higher land prices and construction costs are forcing developers to push rents,” said CBRE Vice President Robbie Kilcrease at a recent press luncheon in Houston.
Houston’s rapid growth is driving land prices higher across much of the metro area.
“You might expect a market this full to spark even more construction, but there aren’t a lot of new retail centers because land costs have outpaced rents,” Kilcrease explained.
The strength of Houston’s retail sector is supported by another strong year for home sales. In 2019 the Houston Association of Realtors reported a record 86,205 single‑family home sales, up 4.8 percent from 2018. The single‑family median home price for the year was $245,000, an increase of 3.2 percent from the 2018 median of $237,500.
Metro Houston ranks alongside Dallas among the nation’s leading new home construction markets. CoreLogic projected roughly 30,000 new home starts in Houston for 2020, keeping the region among the top markets for residential construction.
Preliminary figures show Houston added more than 80,000 jobs in 2019, though those numbers are expected to be revised downward. Even with adjustments, job growth last year was strong—one of the best performances among major U.S. cities.
Looking ahead, Houston’s retail outlook for 2020 appears positive. With forecasts for roughly 43,000 new jobs in the region—and some forecasters predicting closer to 60,000—both rooftops and retail demand are expected to grow, extending retail’s current 128‑month expansion.
