Houston Retail Investment Forecast
Outer-Ring Suburbs Draw Major Commitments;
Highest Multi-Tenant Returns in Texas Could Buttress Deal Flow
Net absorption to reach five-year high as expansionary trends attract tenants. Houston's expedited pace of in-migration, population gains and household formation are helping boost consumer spending across the metro. Retail sales in the market are projected to climb by 10 percent in 2022, outpacing the national rate of growth. These trends make the metro an attractive destination for retailers broadening their national footprint, while many local businesses are also expanding their presence. Over the next two years, Target will occupy two additional spaces, totaling 280,000 square feet in Katy and New Caney. Grocery chain H-E-B will also absorb 100,000 square feet in Manvel in 2022 as it enlarges operations throughout the state. Several other leasing commitments for spaces between 10,000 square feet and 40,000 square feet have been inked recently in fast-growing suburbs adjacent to the Outer Loop and state Highway 6. Stronger leasing activity will facilitate the net absorption of more than 5 million square feet in 2022, a threshold last met in 2017.