Houston’s retail market continues to charge forward

Net absorption in the Houston retail market increased to almost 1.2 million sq. ft. in the second quarter compared to the previous quarter at 647,000 sq. ft., a 76.5% increase, while leasing activity included 1.5 million sq. ft. of signed deals. The retail market saw overall average asking rates rise yet again by $0.40 per sq. ft. quarter-over-quarter to finish at $18.07—surpassing last quarter’s all-time high—on a triple-net basis. A year ago, average rates were at $16.73, representing an 8.0% increase.

Healthy near-term outlook for the Houston region

Employment increased to a 3.3% annual growth rate (25,800 jobs) over the three months ending in May, up from 2.0% growth for the three months in February. The leisure and hospitality sector added the most jobs (7,900), while the mining sector logged the fastest growth rate at 12.9%. Most of the remaining gains came from professional and business services (6,100; primarily from professional, scientific and technical jobs). The May Houston unemployment rate held steady at April’s record low of 3.5%. Texas overall also had an unemployment rate of 3.5% in May, while the U.S. rate was 3.6%. The Federal Reserve Bank of Dallas reported that West Texas Intermediate (WTI) crude oil fell nearly $10 per barrel from April to June as signs of rising inventories and concerns about the pace of global demand growth weighed on the price.The U.S. rig count slipped to an average of nearly 970 rigs in June, a drop of 108 rigs from the three-year high of 1,077 in December. Variations in monthly drilling activity tend to follow changes in monthly oil prices with a lag of about three months.

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