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Houston’s Aggressive Retail Expansion Has Tapered Off, Annual Survey Reports

Connect Houston is taking place in February 2019. For more information — or to attend — click here.

This year, 2.5 million square feet of new retail shopping center space will open in the greater Houston area, a decrease of 17% percent compared to last year, according to Wulfe & Co.’s 26th Annual Retail Survey.

Ed Wulfe, Chairman & CEO of the local retail real estate brokerage, development and property management firm, says the aggressive retail expansion mode of the last four years has tapered off to a more appropriate level. “This year’s square footage projection is realistic, when considering that the square foot average over the previous 10 years was 2.7 million per year,” he notes.

Wulfe attributes the decreased construction to retailers’ greater investment in online business, adding that much of the previous expansion activity was driven by retailers’ efforts to expand their pick-up and delivery capabilities for merchandise ordered online or in their stores.

However, Wulfe believes there’s no reason for owners or landlords to worry about the region’s retail sector, since only an estimated 16% of the new space will be devoted to unleased speculative space.

“Even with the new retail space, overall retail occupancy in Houston will continue strong and maintain an all-time high rate of 95%,” he assures. “With the area’s continued growth along with the expansion needs of both established and new-to-market retailers, the competition for available space in well-located, retail developments, remains strong.”

Wulfe predicts retail rental rates will increase slightly in response to the limited availability of shopping center space, higher land costs, ever-increasing development costs, and estimated increases in interest rates.

Read More at Wulfe & Co.

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