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Market Report

Houston Retail Market Report

2Q 2023

Development Speeds Up as Demand Slows Down,
But Growth Trends Reinforce Local Retail Outlook

Strengthening consumer base stimulates tenant demand. Houston’s robust population and economic expansion in recent years has motivated retailers to launch or grow local operations. From the end of 2019 through the first quarter of this year, the metro’s populace swelled by more than 330,000 residents, the second-largest gain among U.S. markets during that span. This rapid increase in local consumers has been a driving force for Houston’s retail sector. Across 2021 and 2022, net absorption practically doubled supply additions, compressing retail vacancy to the lowest level since 2017. However, the sector will undergo a slight recalibration this year as a slowing national economy, as well as persistent inflation, impact consumer spending habits, and as a byproduct, retailer expansion plans. Net absorption is expected to fall to a three-year low while the volume of new supply rises to a three-year high, creating some upward vacancy pressure in the near-term. 
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