Market Report
Houston Retail Market Report
2Q 2024
Unusually Soft Opening Quarter Not Expected
to Persist as Economic Growth Should Drive Leasing
Net absorption pulled down by national closures. Occupied stock in Houston grew by just 72,000 square feet during the first quarter of this year. While the metric remained positive, that represented the second-softest quarter for tenant demand in over a decade, beating only the April-through-June period of 2020, which followed the onset of the pandemic. The slowdown came after a strong fourth quarter of 2023 in which nearly 1.1 million square feet was absorbed on net, reflecting that the drastic deceleration was an anomaly rather than a trend. Several major national retailers including Macy's, Walmart, Target and Best Buy have been closing underperforming stores amid softer economic conditions, but Houston's favorable growth trends should help backfill vacated space over time. The 2024 construction pipeline was also nearly 70 percent pre-leased as of June, implying net absorption will pick up as the year progresses.
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