Retail Property Market Surging in Houston

Houston is America’s 4th largest city. It is better known for its association with oil, but in recent years the city has diversified to become a leading educational, financial, medical and retail center. Today, the retail property market in Houston is generally strong all over the city – including downtown, the suburbs and surrounding area.

There are several reasons for the strong retail property market in Houston. The city has seen steady job growth as well as expansion of its port facilities and substantial investment in major highway projects. Commercial and residential construction has also been strong over the last few years. And Houston has no zoning laws, which generally makes it easier for developers to build in just the right place.

The average occupancy rate of Houston retail centers hovers around 85% – shopping centers built since 1990 tend to have a slightly higher rate than those built prior to that year. Newer shopping centers are generally better designed, offer better parking and are generally more appealing to both potential tenants and shoppers. Rental rates in the Houston retail property market average around $ 1.50 per square foot.

Planned communities, such as Sugar Land in the Southwest and the Woodlands to the north have been successful in both attracting new residents as well as new retail projects. And Houston has been innovative in renovating older buildings to be used for retail and office space.

It isn’t just the suburbs that are booming in Houston – the city has made major efforts in revitalizing its downtown area and attracting residents and visitors. An estimated 4,000 people live in the downtown area – a figure that’s expected to rise to around 10,000 by 2010. Around 70,000 students are enrolled at the various colleges and higher education facilities that are located in and around downtown.

Revitalization of downtown began in earnest in 1995, in an attempt to bring retail, residential and commercial developments to the somewhat run down area. Since that time, around $ 4 billion has been invested in the retail property market downtown. This includes public and private developments – and the successful reclamation of over 1000 acres of land. Improvements such as improved parking and street lighting have also helped to attract tenants and retailers.

Today, downtown Houston boasts around 2.5 million square feet of retail space, much of it concentrated in the historic district, centered on Main Street and Texas Avenue. Notable recent large developments offering retail space include the Reliant Energy Plaza and the Five Houston Center.

Several major new developments are planned for downtown, including Discovery Green and One Park Place – the city’s first high rise luxury apartments in downtown in over 40 years. But the most ambitious project at the moment for downtown is Houston Pavilions, a 350,000 square feet development, planned to open in late 2008 at a cost of around $ 170 million.

One of the most respected local developers of both retail and residential property in the Houston area is the Johnson Development Corporation. The company is responsible for over forty acclaimed residential projects – ranging from golf course communities to townhomes – and almost a dozen retail developments.

Johnson Development was founded in 1975 and the president, Larry Johnson has over 40 years experience in the real estate business. Apart from its successful projects in the Houston area, the company is also responsible for developments in several other states, including California, Georgia and Colorado.

Some of the biggest developments by Johnson Development include shopping malls such as Forest West Center, Jones Square and the South Loop Center. Currently, the company’s biggest retail development in Houston is the huge Steeplechase Mall, offering around 350,000 square feet of retail space.

Johnson Developments is also a top developer in Houston when it comes to residential projects. Their residential projects range in size from single family home communities of 40 acres to townhouse communities and huge golf course communities. One of their biggest developments to date is the prestigious golf course community at Atascocita, a development which covers more than 5,000 acres.

All indications are that the retail property market in Houston seems set to continue with its strong growth – a trend which local companies such as Johnson Development can feel justifiably proud of.

Houston Retail Space Leasing

Houston retail space leasing can help retail building owners to increase revenue, vendors to increase sales and provide a variety of industry personnel with data and reports to facilitate decision-making and communication. Retail center owners can review rental rates for nearby properties to insure their rental rates are competitive. Vendors to the Houston retail building community can focus their marketing and sales efforts. OConnor & Associates provides comprehensive retail building data for the Houston metropolitan area. This Houston retail building data is used by investors, management companies, brokers, prospective tenants, vendors, appraisers and other industry participants. O’Connor & Associates Houston retail building data is updated quarterly. Retail rental rate and leasing information is obtained directly from owners, management companies and leasing agents.

Benefits of O’Connor & Associates Houston retail building data include:

Retail building owners can increase revenue by increasing rental rates after comparing rental rates for their property with the rental rates for competing Houston area retail buildings. Rental comparables can be targeted based on year of construction, building size, anchored versus non-anchored, and location.;
Investors can increase acquisitions by targeting properties which fit their acquisition criteria. Information regarding both properties which are for sale and those which have sold are available.;
Retail building investment brokers can increase their sales by utilizing the ownership information to contact retail building owners and can also use the statistical data reporting package to perform analysis for clients. Comparable sales data is available for some properties.;
Retail building leasing agents can efficiently identify space which meets a clients requirements. Retail leasing brokers can search by location, rental rate, anchored versus non-anchored, year of construction, building size, location, type of retail property, (strip center versus neighborhood center versus community center versus mall) and many other factors.;
Retail building vendors can use the ownership information to focus their sales effort on the most appropriate retail buildings;
Retail building owners and management companies can use the statistical reporting package to understand and analyze market status and trends. By reviewing both current market trends and construction which is currently underway and proposed, owners can gain insights into probable market trends for the next 12 to 24 months. Historical data for the Houston retail market is available from 1988 for occupancy, rental rate, absorption and many other factors.;
Retail building owners, brokers and management companies can compile data and reports for clients and internal reporting;
Appraisers can use the data for rent comparables and to calculate submarket occupancy, rental rates, rental rate trends, absorption, and review properties proposed and under construction. Appraisers will also benefit from data regarding comparable sales.
Houston area retail buildings are classified by type (strip center, neighborhood center, community center, regional mall and single-tenant).

Features of O’Connor & Associates Houston retail building rental and leasing data include:

Rental rates, occupancy, management company, leasing company and ownership information updated quarterly;
Details on over 20 physical building features such as year built, net rentable area, type of center, etc.;
On-line access to live database;
List of tenants currently at property;
Ownership information including contact person, owner company, phone number, and address;
Management company information including contact person, phone number and address;Historical data since 1999;
Robust options to search for properties. There are over 40 fields of data which can be used to search for targeted properties.;
20 options for reports including a detail sheet for each property, rental rates by property type (strip center, neighborhood center, community center and regional mall), occupancy by type, absorption by type and many additional reports. O’Connor & Associates is receptive to adding report formats of use to multiple users.

Sample reports are available below:

Detail sheet
Rental rates by type
Occupancy rates by type
Absorption by type

OConnor and Associates has provided comprehensive retail building data for Houston since 1988. Our retail building data includes rental rates, occupancy rates, contiguous space available, amenities, ownership information, management company information and extensive details regarding each retail building. Our staff can also provide retail building market studies and feasibility studies. In addition, our staff can help you evaluate options for improving performance at a property. Other services include highest and best use analysis, market rent analysis, lease audits, lease abstraction, investment and portfolio analysis, and custom consulting.