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Market Report

Houston Retail Market Report

Second Quarter 2019

Stout Household Formation Driving Construction; Western Suburbs Performing Well

Density spurring strong rent growth.Household formation will remain a key driver of the Houston retail market this year. The infusion of nearly 50,000 new households will boost demand for retail space, keeping vacancy anchored in the mid-5 percent range. Vast suburban sprawl is encouraging many national tenants to increase their Houston footprint, limiting space availability, particularly in strip centers and neighborhood centers. Western suburbs like Katy will see an uptick in demand despite a wave of supply throughout the year. Rent growth should also jump in these areas as household density and buying power increase. Rental gains will be the most emphasized, however, in neighborhoods near the core where household density is highest, like Montrose, Upper Kirby and areas surrounding the Texas Medical Center.

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