Texas’ major retail markets of Austin, Dallas, Fort Worth, Houston and San Antonio all report strong performance during 2007 in terms of leasing, construction, occupancy and retailer demand.

AUSTIN:  Austin’s retail market as of year-end  2007 reported healthy occupancy of  92 percent, thanks to the backfilling of existing vacancies combined with an active demand-based construction market.

The occupancy rate of 92  percent represents the strongest retail occupancy rate among Texas’ major markets. 

Austin’s occupancy rate is based on a total retail inventory of approximately 37 million square feet of retail space.

Active retailer demand led to a construction market in  2007 that set a record for new space in the Austin-area market. During 2007, 4.2 million square feet of new retail space came online. This construction include a new open-air mall,  The Domain, anchored by Neiman Marcus and Macy's, as well as Tiffany's, Barney's Co-Op and others. 

Austin’s retail market continues to benefit from strength in the area’s strong economy.  During 2007,  Austin recorded a 13,748 single-family home starts, a slowdown from 2006's rate and a number that will ensure the supply remains in balance with demand. . For 2007, Austin ranked seventh nationally in terms of annual home price appreciation, according to the Office of Federal Housing Oversight. 

In terms of job growth, the Austin area added 20,000 jobs in 2007 for a job growth rate of just over 3 percent.  

The economic outlook, combined with strong retailer demand and construction based on leasing, ensures that Austin’s retail market will continue to enjoy another strong year through 2008 and into 2009.

DALLAS/FORT WORTH: The Dallas/Fort Worth retail market continues to show strength across the board. 

As of year-end 2007, the D/FW retail market reported an occupancy rate of 89.3 percent, based on a total market inventory of more than 166 million square feet of multi-tenant retail space.

Retailer demand for new space resulted  in a 2007 construction total of 3.8 million square feet, down notably from 5 million square feet in 2006. For 2008, construction should jump, based on the large number of planned new projects, including two open-air malls. 

The occupancy rate is boosted by strong retailer leasing activity. New and expanding retailers are extremely active, adding locations throughout the D/FW market. These included Wal-Mart Supercenter, SuperTarget,  JCPenney, Dick's Sporting Goods and others.

The retail market continues to grow in large part because the economy continues to grow. In terms of job growth, D/FW added approximately 65,000 net new jobs in 2007, which makes it one of the strongest new job markets in the country. The housing market reported single-family starts of 30,606 new homes, down notably from 48,000 starts in 2006. The decline is keeping the market in balance, and D/FW home prices are stable and showing increases in most markets.  

The outlook for the D/FW economy is equally strong. Therefore, we expect the D/FW retail market to remain balanced in terms of supply and demand through the end of the year and into 2009.

HOUSTON: Houston’s retail real estate market as of year-end 2007 reports its strongest balance of supply and demand this decade, thanks to demand-based construction and active leasing from new and expanding retailers.

As of year-end  2007, the overall occupancy rate equaled 88.5 percent. The occupancy rate ranks as one of the market’s strongest this decade and is based on a market inventory of more than 132 million square feet.

Retailer expansions are resulting in one of Houston’s strongest construction markets ever. During 2007, new construction added 4.6  million square feet, up from 4 million square feet in 2006. In addition, another 4 to 5 million square feet or more are under way to open in 2008. 

The housing market, one of the biggest drivers of retail demand and retail sales, continued to report strong activity. During 2007, new single-family home starts totaled 44,000, the highest new-start rate among Texas' major markets.   

The job market is also running on all cylinders. Houston added more than 64,000 net new jobs in 2007, making it one of the strongest job markets in the nation. The outlook for 2008 is equally strong.

SAN ANTONIO: San Antonio’s retail market continues to report a notable balance of supply and demand for retail real estate, thanks to retailer demand for space and construction with strong pre-leasing.

At year-end 2007, the overall market reported an occupancy rate of 91.2 percent, making San Antonio one of the strongest retail markets in Texas, based on occupancy.  

The occupancy rate is based on a retail market inventory of approximately 33.9 million square feet of multi-tenant retail space in shopping centers with 25,000 square feet or more.

Based on its performance as of year-end 2007, the outlook for the remainder of the year and into 2009 is excellent. 

Thanks to space demand from active retailers, particularly large-format retailers, the San Antonio market is in the midst of an extremely active construction market.  During 2007, the market reported  new construction of 3.5 million square feet.  An equivalent amount is expected for 2008, based on the projects in the works or under construction for 2008 openings.

San Antonio’s retail market has reported several back-to-back years of strong, quality growth, and 2007 was no exception. The strength in the market results largely because the San Antonio area reports one of the strongest regional economies in the state, if not the nation.

In the key housing market, San Antonio added approximately 13,000 new single-family houses in 2007.  While this is down from the 19,000 recorded in 2006, it will still enter the record books as one of the area’s strongest years ever for residential growth. For 2008, the market is expected to add 12,000 new starts. 

In terms of job growth, the market continues to report great strides. During 2007, the market recorded 16,000  net new jobs for a job growth rate of 2 percent. Job growth is boosted in part by the new Toyota truck plant, which is now actively building the new Tundra. Recent reports show that the Tundra is already one of the top 10 passenger vehicles built in the U.S., in terms of units sold.

Throughout 2008 and beyond, the economic health is expected to continue. Therefore, based on current economic growth and the high level of retail demand, we expect to end 2008 with another great year for the San Antonio retail market.