Houston Retail Market Report

Houston appears far removed from pandemic setbacks. Sector uncertainty that emerged at the onset of the pandemic has largely faded, as the market vacancy rate recovered all of 2020's losses by the midpoint of 2022. Starting in the second quarter of 2021, availability contracted in every period through June of this year, with net absorption exceeding 1 million square feet in all five quarters during that interval. Across those 15 months, net absorption totaled nearly 6.9 million square feet, the largest volume over an equivalent time series since 2016-2017. The rebound has been extensive, with 10 of Houston's 12 submarkets registering vacancy rates at midyear that were lower, or within 50 basis points of the year-end 2019 metric. One major outlier, however, is the central business district, which continues to face pronounced challenges as hybrid and remote work schedules limit weekday foot traffic. Availability in the CBD is still more than 500 basis points above the pre-pandemic level.