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Q2 2021 | Houston Retail Market Report

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2021_Q2_Retail_HERO_1536x1040
 “Resilient and creative retailers, reasonable landlords
and consumers with a great deal of liquidity have
combined to launch retail into a strong recovery mode.”
Anjee Solanki | National Director, Retail | U.S.

 

Key Takeaways

  • Vacancy remains low and rental rates increased
  • Houston’s retail sector posts negative absorption due to lack of
    leases in 2020
  • Developers continue seeking new and innovative opportunities
  • Houston’s positive job growth and low unemployment rate
    boosts economy
  2021_Q2_Retail_Vacancy Rate   2021_Q2_Retail_Net Absorption 
   2021_Q2_Retail_Under Construction    2021_Q2_Retail_Lease Rates

 

Houston Highlights

Houston’s vacancy rate increased marginally from 5.9% to 6.0% over the quarter as 263,800 SF of new product delivered. Construction activity remained steady between quarters and retail foot traffic picked up as COVID restrictions in the state of Texas eased. According to Emsi, a labor market data company, Houston’s MSA population grew by 500,885 over the last five years, now at 7,172,693, and is projected to grow by 544,540 over the next five years. Total regional employment grew by 74,098 over the last five years, now at 3,350,731, and is projected to grow by 166,496 over the next five years. The top three industries in 2020 were restaurants and other eating places, education and hospitals, and general medical and surgical hospitals.

Market Indicators

2021_Q2_Retail_Market Indicators 

Historic Comparison

2021_Q2_Retail_Historic Comparison 

 

Market Fundamentals

2021_Q2_Retail_Market Fundamentals 

The forecast in the above graph is based on a trailing 4-quarter average.
*The average asking rents in the table to the left are an average of all property types that are currently listed with an asking rate. This average does not include properties that are fully leased or that do not list an asking rate.

Recent Transactions

 2021_Q2_Retail_Recent Transactions1 

2021_Q2_Retail_Recent Transactions2

 

Executive Summary

Commentary By Wade H. Greene IV, CCIM | Principal

The Houston retail market remained strong as restaurants and retailers conducted their first full quarter of business without a mask mandate. Like the rest of the country, Houston’s retail sector was impacted by the COVID-19 pandemic. However, the Bayou City has seen a much faster recovery while vacancy rates only peaked at 0.7% above pre-pandemic levels of Q1 2020. The combination of Houston population growth, its retail market strength pre-pandemic and the State of Texas’s approach to government mandates has accelerated the resurgence compared to other major markets across the country. Additionally, Houston ranks in the top three U.S. markets in employees returning to the office, which has been particularly helpful to the local Food and Beverage (F&B) sector.

Across the country, retail sales are starting to improve as well. June instore retail spending increased three times higher than Wall Street’s expectations. The outlook has been on the rise for F&B as well. Many restaurants in the fast-casual and quickservice space reported same-store sales increases in the second quarter, including Chipotle and Smoothie King posting over 30%. In addition, trends that accelerated from COVID-19, such as the increase in patio dining, curbside pickup and online sales, are here to stay as restaurants look to restructure existing units and new prototypes. Even the casual dining space is starting to recover, as Darden Restaurants posted same-store sales just 0.5% below Q2 2019 levels.

Restaurants and retailers evaluating their development strategies are taking notice of the recovery of Texas markets like Houston. Over the last six months, our team has noticed an overwhelming increase in demand from national and local retailers across every sector seeking new space in the city. As new to market and existing brands look to develop and infill sites in Houston, I believe we will see vacancy rates compress below 6% again by year-end.

     
   2021_Q2_Retail_Idle Hands  
     

Idle Hands
Colliers recently had the opportunity to represent Idle Hands in lease negotiations at 910 Westheimer Rd. in Houston, Texas.

Idle Hands, currently on Rainey Street in Austin, Texas, is a partnership between Matt Wolski and Andrew Hunter. The new second location in Montrose will provide tropical craft cocktails, a full kitchen with roof deck/patio seating and live music seven days a week. They plan to open their doors this fall 2021.

 


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Q2 2021 | Houston Retail Market Report

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Related Experts

Lisa Bridges

Director of Market Research

Houston

Lisa joined Colliers in 2010 as Director of Market Research and has 37 years of commercial real estate experience. Lisa initiates proactive market research projects to further the business goals of the company. She writes and prepares 29 market reports annually, including quarterly reports on Houston's retail, office, industrial and healthcare properties.  Further, she prepares statistical ownership reports for various clients as well as an annual Houston Economic Overview. Lisa also creates PowerPoint market presentations, trade journal articles, and other marketing materials supporting the company's business endeavors. She works with senior management in planning the company's marketing strategy and public relations support for local and national conferences, luncheon meetings, recruitment programs, and special events.  Lisa works closely with the company's brokers to develop effective custom market research material specific to existing and potential clients.

Lisa serves on the Colliers Editorial Board, the Colliers U.S. Research Council, and is a recipient of the Colliers Researcher of the Year Award.

Lisa earned the Commercial Property Research Certification (CPRC) from Colliers University.  CPRC is the first and only accreditation for commercial real estate research professionals. It offers a professional development path to increase strategic and tactical expertise in marketing/research, knowledge of the industry and capabilities with commercial real estate tools.

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Wade Greene

Principal

Houston

Wade Greene joins Colliers Houston as Director of Retail Services and Principal of the company.  Greene will use his experience and enthusiasm for retail brokerage to grow the Colliers Houston Retail and Hospitality Advisory Teams.  

Wade specializes in tenant representation services for local and national restaurant, retail, and entertainment concepts.  With the assistance of C-Suite level clients and his national brokerage network, Mr. Greene has built a Corporate and Franchise Growth Solutions Platform, helping companies seamlessly execute driven roll outs across the country. 

A native Houstonian and second-generation Houston based commercial real estate professional, Wade has represented companies such as, Alamo Drafthouse Cinemas, Walmart, Salata, Kids Empire, Darden Restaurants, Earl of Sandwich, Putt Shack, Flight Club, Ace Bounce, Seoul Taco, Tasc Performance Apparel, Krewe Optical, Chick’n Cone, Firehouse Subs, Voodoo Doughnut, Jollibee, Roses, Anytime Fitness, Dat Dog, Dyson and Award-Winning Texas Chefs.     

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Anjee Solanki

National Director, Retail Services

San Francisco

AREA OF EXPERTISE

In Anjee’s current role, as National Retail Director for the USA, she has developed strong relationships and strategic leadership to over 500 + retail professional nationally across 140 markets within Colliers for Investment Sales, Agency, Retailer Rep, and Retail Asset & Property Management.

Anjee Solanki brings 30 years of focused retail real estate experience to Colliers International.  She provides strategic retail advisory services to enhance value for her clients with her expertise in lifestyle, community, power center, neighborhood, mixed-use retail/residential, and resort retail. 

She has developed and manages strong working relationships with institutional and private clients such as State of Florida, State of Michigan, Heitman, Invesco, Grosvenor Americas, American Realty Advisors, TH Realty, PNC, and Zurich to name a few.

Her strategy identifies current market and property inefficiencies to capture untapped value through asset repositioning, releasing, redevelopment, rehabilitation, proactive management, and enhanced marketing. 

Creative problem-solving is her specialty, and she becomes a key stakeholder with national and international retailers, such as JPMC, Opry City Stage/Ole Red and Tim Hortons, and many others. Her highly focused approach reduces the risk profile and provides clients with a thoughtful approach executing strategic multi-year planning initiatives. 

BUSINESS BACKGROUND

Previously, Anjee served as Executive Vice President, Retail Services for Madison Marquette. She successfully assisted with repositioning community centers to lifestyle projects and identified opportunities to create value, resulting in higher returns for her clients. She also provided strategic analysis on complex redevelopment projects to address both the asset’s financial stabilization and/or the client’s exit strategy

BLOG

Anjee continues to be an insatiable collector of all things retail. She’s a student of culture living next door to future shoppers, whose fleeting trends constantly change the retail landscape … driving retailers, landlords and developers crazy! Read her Blog at:  https://knowledge-leader.colliers.com/author/anjee-solanki 

COMMUNITY INVOLVEMENT

Anjee is originally from Southern California and currently resides in San Francisco.  She is active in the Rincon Hill neighborhood residential improvement group, which participates in the public review of the highly anticipated Salesforce Transit Center in San Francisco.
 

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