Economic uncertainty isn't stopping Houston from thriving. Retail investment sales in the third quarter in the city more than doubled versus the previous three months to a volume of nearly $800 million, according to a market report from Colliers. However, the quarterly average sales price per square foot ($307) was down from the previous three months' $287 per square foot.
Demand was another strong performer, with the category surging by 63.7 percent to 838,910 square feet. Additionally, that number exceeded the 695,100 square feet in deliveries — marking the first time that's happened since the end of 2023.
Leasing, meanwhile, overall decreased 5.7 percent to 1.8 million square feet. The overall vacancy rate remained flat at 5.8 percent, which is "near record lows," said Colliers.
Then there's asking lease rents, which increased by six cents per square foot to $20.37. While still down from the $20.67 per square foot a year ago, this trend tells you the category is at least recovering.
Construction was also a mixed bag. Only 2.39 million square feet was underway compared with 2.86 million square feet in the previous quarter. However, that's still high compared with elsewhere.
"Retail construction across the Houston MSA remains one of the most dynamic in the country, driven by sustained population growth, active residential development and resilient consumer spending, Colliers highlighted.
"With 2.4 million square feet of new retail space currently under construction – and more in the pipeline –Houston stands firmly among the top U.S. markets for retail expansion."
Of the retail pipeline, 85 percent of it is located in the Southwest, South, North and Northwest submarkets. Colliers predicts that the highest quality product will find the most success in the future in Houston's retail sector.
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