By Ian Pierce, vice president of communications, Weitzman
In Houston, despite a much-reported oil slump, the market reports a healthy occupancy rate of 95.5 %. That’s a near-record, although occupancy is down half a percent compared to a year ago, due to slightly slower retail shop-space leasing and store closings that added close to 1 million square feet of vacant space to the market.
The oil price slump, which began in the second half of 2014, has negatively affected office space related to exploration, particularly downtown and in the “Energy Corridor”. But Houston’s “downstream” market is thriving, thanks to the positive effect low prices have for refineries and chemical plants. The success of the downstream market is one recession Houston continues to report positive, though lower, job growth. And the downstream health is boosting population growth, job growth and retail growth in markets like Deer Park and Baytown.
The combination of job, residential and population growth results in retail expansions. Many are leasing increasingly scarce space in existing centers. Despite the healthy retail market, construction remains at near-historic lows.
Houston, with 6.6 million people, has grown 41.7 % since 2000. That population growth is one key factor in Houston achieving the ranking of No. 2 in the U.S. for single-family home stores with an annual start pace of nearly 26,000 new homes.
New space is largely for anchors, particularly grocer anchors, and speculative space is extremely limited. Houston’s new space for 2016 is expected to slightly exceed 3 million square feet, with the great majority for grocer-anchored retail, as well as power anchors and some mixed-use space; new space in 2015 topped 2.7 million square feet.