Between pandemic-related lockdowns and a freak cold snap that saw snowstorms and power outages across large sections of the state, Texas has had a rough 12 months between spring 2020 and 2021. But a big part of the country’s economic recovery will depend on how retail and hospitality fare as vaccinations increase and restrictions are relaxed.
According to numbers from NAI Partners, Houston’s retail sector has certainly faced its issues in the last 12 months, but it’s certainly a long ways off from its office market, which ended 2020 with the highest vacancy percentage in the country. This February, Houston had a total retail occupancy rate of 93.6%, down slightly from 94.2% during the same period a year prior.
Despite the slow churn of retail leasing, the Houston metro area did see an increase in rent prices, at $18.68 triple net average. A year prior, the price was $17.94. Rents have steadily risen over the last few years, starting as low as just over $16 triple net in February 2017.
However, absorption is down and deliveries are significantly lower with only 552,000 square feet of space going online in February 2021 versus nearly a million square feet in February the previous year. Just 590,000 square feet of space was absorbed over 43 buildings last month.
Areas seeing the most construction activity include north Houston, the city’s inner loop, and northwest Houston. The regions with the least recent construction activity are the northeast and south.
Big leases highlighted by NAI Partners include a 26,000-square-foot renewal at Vanderbilt Square by Barnes & Noble, a 22,500-square-foot deal for Burkes Outlet in Angleton, and a 15,000-square-foot lease by Aaron’s in Fairfield’s Jones Plaza.