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Employment Growth Drives Suburban Demand;
Tailwinds Emerge For Urban Retailers
Tenants drawn to the suburbs. Firms like Exxon Mobil relocating to Houston helped the metro add the second-most jobs among major U.S. markets over the past year ended in August. Suburban areas have absorbed most of this influx, prompting retailers to expand to meet the needs of new residents. Rapidly growing neighborhoods in the north and southwest experienced the strongest tenant demand, with grocery stores and strip centers leasing at an accelerated pace. Lifestyle and experiential retailers also increased their footprints, sustaining tight market conditions in the suburbs and fueling stronger rent growth compared with the urban core. Moving forward, the recent Fed rate cut is expected to spur construction starts, which should support leasing activity as tenants seek new, modern spaces.