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HOUSTON-Despite the changing local scene due to retail shutdowns and mergers, the market was remarkably upbeat last year, according to the latest report.

Researchers for Dallas-based Weitzman Group and affiliate Cencor Realty Services say last year's main story was the push to build large-format stores and mega-power centers. The play list naturally includes super centers from Wal-Mart Stores Inc., Target Corp. and Home Depot USA Inc., but also new developments like the 260,000-sf La Centerra in Katy, 250,000-sf Terramont Shopping Center in the Woodlands and 600,000-sf Crossing at 518 in Pearland. The report notes the construction included several smaller neighborhood and community centers ranging from 10,000 sf to 20,000 sf.

Though the 2.5 million sf added to the market during 2005 was down from the 3.4 million sf that came on line in 2004, the numbers are still indicative of a brisk housing growth. The inventory now stands at 132.5 million sf.

"Retail follows the roof tops and the growing number of rooftops is creating the retail demand," says David Stukalin, Weitzman's president in Houston. The hottest spots for new development, he continues, are the US Highway 290 corridor, Conroe to the north of the city limits and Katy Freeway to the west.

Stukalin adds that the shutdown of Randall's grocery stores and Mervyn's mall locations haven't had too much impact on overall retail trends. "Most of the Mervyn's will and have been absorbed throughout Greater Houston," he tells GlobeSt.com. Randall's stores probably will be divided for other uses, he predicts.

From a leasing standpoint, overall vacancy dropped slightly from to 13% at the year's close; it was 13.1% at yearend 2004. Stukalin says landlord concessions have fallen off on the anchor developments. However, he adds, "with unanchored properties, primarily on the west side of town, you're seeing a lot of advertising for free rent."

Stukalin predicts this year will bring three million sf of additional new space. "We're still seeing retailers moving into this market," he adds. "It's because housing growth remains brisk, not only on single-family, but multifamily as well."

Instant Insights /

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