2025 News Archive

The Houston retail market continued to perform steadily in 3Q25, supported by ongoing population growth and consistent consumer activity. Vacancy remained in the mid-5% range, signaling balanced supply and demand, while net absorption exceeded 800,000 SF for the quarter. New construction deliveries slowed to approximately 700,000 SF and the development pipeline contracted, helping preserve occupancy and mitigate oversupply concerns. Asking rents held firm on average at $24 pSF NNN throughout the Houston region, with modern, well-located centers commanding premium rates. Overall, Houston's retail sector remains well-positioned, driven by strong leasing momentum, disciplined development, and resilient consumer fundamentals.

Houston's retail construction pipeline remains robust, with approximately 3.4 million SF under development, primarily in the Far Northwest (Cypress, Bridgeland, Tomball and Magnolia), Far North (Conroe, Huntsville, Willis, and New Waverly), and Katy areas, driving an increase in upcoming supply. However, in 2Q25, a lack of absorption led to a 10-basis point rise in the overall vacancy rate, from 5.4% to 5.5%. This slight increase in vacancy is due to new spaces being filled by new construction rather than the absorption of existing vacancies. While supply and demand had been in close balance in recent quarters, with most of the net absorption going into newly delivered properties, the market is now adjusting as retailers take a more cautious approach amid economic uncertainties. As tenant absorption lags behind the influx of new space, vacancy rates are rising, suggesting potential shifts in leasing strategies and tenant demand moving forward.

Houston's retail market remained balanced in 1Q25, with the vacancy rate inching up to 5.4%, just above the five-year average. This slight increase reflects a market settling into a stable rhythm, with supply and demand largely in sync. While 3.3 million SF of retail space is currently under development, about 40% remains available for lease. Still, brokers report that prime, first-generation space is quickly claimed before hitting the open market, offering little relief for tenants seeking new, high-quality options.