Colliers: Houston retail vacancy up slightly in third quarter

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According to Colliers International’s latest market report, Houston’s average retail vacancy rate increased 20 basis points from 5.4 percent to 5.6 percent over the quarter and by 40 basis points from 5.2 percent a year ago. At the end of the third quarter, the city had 15.7 million sf of vacant retail space.

Among major property types, single-tenant retail had the lowest vacancy rate (1.6 percent), followed by theme/entertainment (2.3 percent), lifestyle centers (3.2 percent), malls (3.9 percent), and power centers (4.4 percent). The highest vacancy rate is among outlet centers (11.8 percent), and the largest amount of vacant space by sf is among neighborhood centers.

Currently, 2.8 million sf of retail space is under construction, 55.7 percent of which is preleased.

The market posted 438,000 sf of positive net absorption in the third quarter, a 66 percent decrease from the previous quarter.

Houston’s citywide average quoted retail rental rate for all property types decreased between quarters from $15.17/sf triple net (NNN) in second quarter 2017 to $14.88/sf NNN.

Retail leasing activity, which includes renewals, decreased quarterly from 1.4 million sf in the second quarter to 1.2 million sf in the third quarter.