Houston Retail Market Report

Submarket trio driving momentum. Houston will add the third-largest amount of new retail space nationally in 2024, trailing only Dallas-Fort Worth and Phoenix. Unlike those two Sun Belt peers, however, Houston will achieve a net absorption total that tops new supply, aided by a pre-leasing rate above 70 percent. As a result, the metro will be the largest in the U.S. by inventory to post a reduction in retail space availability in 2024. Houston’s eastern half is powering this performance. The Southeast submarket had the fastest rent growth of any location in the country with at least 50 million square feet of local stock last year. Neighboring East and Northeast Houston, meanwhile, each recorded annual vacancy reductions of at least 50 basis points. Momentum should continue as these three areas combine for less than one-fourth of the 2024 completion slate. Southwest Houston, on the other hand, accounts for a larger share of deliveries than that trio of eastern submarkets put together. Here, significant construction in Missouri City and Richmond is necessitated by ongoing household creation.