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Steady Absorption Marks Houston Retail: Q&A with Weitzman’s Kyle Knight

Retail construction has fallen in the Houston metro, allowing higher absorption of empty blocks of space, according to Weitzman’s mid-year report. Company Senior Vice President Kyle Knight shed more information on the current state of the market, and the year-end outlook.

Q. What are we seeing right now in the Houston retail market?
A. Houston benefits from a strong economy that is creating jobs and adding housing and people, and these factors are helping the retail market achieve an occupancy rate of a near-record-high 94%.

Steady retail demand is absorbing a lot of key vacancies in existing retail properties, and that’s helping mitigate the vacancies left during the past 12 months by Sears and Toys “R” Us. And conservative construction remains firmly in line with demand, with a lot of the new projects consisting of retail in walkable mixed-use developments, as well as more traditional retail centers with tenant mixes focusing on food, entertainment, fitness, medical/dental and services, all of which are Internet-resistant.

Q. Where are we today, versus 10 years ago?
A. Over the past decade, we’ve seen Houston’s retail inventory grow by around 17 million square feet, which averages to a very conservative 1.7 million square feet of new space a year. That managed growth has seen overall occupancy climb about 8% over the past decade, from 86% in 2009 to 94% today. People who say the retail market is in trouble aren’t looking at stellar results like these.

Q. Will this state of affairs continue for the rest of 2019?
A. We expect to see the occupancy climb a bit, because we’re seeing only about 1.3 million square feet on track to open this year. That new space is firmly in line with demand, so it will be a boost to occupancy. We also expect to see the tight retail market result in more of the vacant Toys “R” Us boxes being backfilled, and redevelopments will boost leasing at some of the market’s older centers that currently are outmoded but offer great locations.

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About Mark El-Rayes

Mark El-Rayes is an award winning designer and photographer from Beirut, Lebanon. El-Rayes has over 15 years in the design industry, 5 years of which he served as a Mass Communication Specialist in the United States Navy at Naval Air Station North Island, Navy Public Affairs Support Element - West (NPASE). El-Rayes is a full-stack developer, seo specialist, photographer, and artist.