After Slow Start, Construction Moves Again

Kramp says Houston’s retail sector is seeing vacancy dwindle to the tight single digits.

HOUSTON—While grocery-anchored centers have dominated the recent construction pipeline, more mixed-use, neighborhood and freestanding retail projects fill out the retail pipeline opening up inventory for big box and junior anchors to expand within the Houston market, according to a first quarter retail report by CBRE Research. Still, construction continues to lag the pace set in the last construction cycle of 2006 and 2007 when 16 million square feet delivered.

After a slow start to the construction cycle, developments are finally moving forward. Currently 2.2 million square feet of retail space is under construction, of which 35% is grocery-anchored centers. A full construction pipeline is needed as limited supply continues to constrain leasing. Class-A space is 97.7% occupied and tenants looking for quality space will likely turn to new developments underway. First quarter completions were 96.4% occupied upon delivery.