Throughout 2024, Houston’s retail market has overcome a series of challenges, laying the groundwork for a new season of opportunities. Several elements contributed to the mitigated retail activity in the first half of 2024, namely: high borrowing costs and low rent growth. However, in recent weeks, there has been significant progress in Houston’s retail industry. In Q3 of 2024, Houston’s retail sector maintained a moderate availability rate of 5.3%, with a little over 544,000 sq. ft. of new retail space delivered (CBRE).
Despite some minor setbacks, Houston’s retail market is on the brink of a promising transformation. Looking into the year ahead, the retail market is expected to maintain resilience, “with shopping center occupancy at a decade-high rate of 95.6%” (Colliers). As consumers prioritize experiential shopping options, the retail market is primed to capitalize on these trends in 2025. In terms of investment, the average price per square foot for retail properties rose to $269 in Q3 2024, up from $252 in the previous quarter. This increase reflects sustained investor confidence in Houston’s retail sector. Furthermore, recent interest rate cuts by the Federal Reserve have already begun to spark positive change, positioning Houston’s retail sector to benefit significantly in the upcoming year.
“We’ve had a great year and will have an even better year next year with some new larger projects kicking off construction. Due to the reduced supply of space from new construction, the demand for available space is as high as I’ve seen it in recent years,” says Jay Sears, co-founder and managing partner of NewQuest Properties. Combined with Houston’s strong population growth and rising consumer demand, these economic shifts suggest that the retail market is not only recovering but also poised to capitalize on emerging trends. These factors not only ensure the resilience of the market, but also pave the way for upcoming growth and opportunity in the new year.