Houston Retail asking rents at an all-time high due to strong economic growth and steady development pipeline.
Vacancy rate at 5.3%
Eight months into 2022, overall vacancy in the Houston retail market has tightened to 5.3%, dropping 80 basis points from this time last year’s 6.1%. Availability is at 6.1%, down 80 basis points from 6.9% in August 2021. The difference between this figure and the vacancy rate reflects expected future move-outs. The eight months of 2022 mark the highest amount of leasing activity in January through August on record for the Houston retail market since 2016. 6 million sq. ft. of leasing activity comprised of both new leases and renewals was recorded, while net absorption (move-ins minus move-outs) is at 3.6 million sq. ft., up 11% year over year.
Average retail NNN asking rents at all-time highs
Positive trends in leasing and absorption have driven average retail asking rents higher. The Houston metro NNN average asking rent is $19.50 per sq. ft., up 3% from $18.95 last year. Strengthened by the region’s strong demographic growth and a steady development pipeline, rent growth is expected to improve further through the near-term forecast so long as the local economic recovery continues.
Houston housing market closer to pre-pandemic conditions
With prospective homebuyers facing record prices, rising interest rates, a limited supply of homes on the market, and general consumer inflation—home sales experienced their fourth consecutive monthly decline in July. According to the Houston Association of Realtors July 2022 Market Update, single-family home sales dropped 17.1%, with 8,370 units sold compared to 10,102 in July 2021. That is the lowest one-month sales volume since January 2022. The market is trailing 2021’s record-setting pace by 1.3% on a year-to-date basis.
Leta Wauson
Director of Research
[email protected]
tel 713 275 9618