Houston Retail Market Report

Local consumer demand outpaces supply pressure. Population growth in Houston last year more than doubled the 2019 metric, resulting in the second-largest gain among major U.S. metros. A swiftly growing job market has propelled local expansion, supporting a need for additional retail in many suburban areas, including rapidly growing outer suburbs like Katy and Tomball. Both townships reported a population growth rate of at least 15 percent from 2020 to 2023. Additionally, each of these areas saw over 2,000 apartment units absorbed on net last year. Consumer demand for essential retail, such as grocers and restaurants, will grow in conjunction with the population. Moving closer to the city center, retail vacancy in the CBD compressed 80 basis points last year. Some of that momentum could carry into 2025, as office occupancy began trending upwards in mid-2024, bringing additional weekday foot traffic to the area. Still, leasing activity may stay concentrated around growing suburbs, with move-ins scheduled downtown — including a new pickleball gym — reflecting the value placed on experiential tenants to drive foot traffic to surrounding stores.