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www.colliers.com/houston
Q3 2013 | RETAIL MARKET
HOUSTON RETAIL
MARKET INDICATORS
Q3 2012 Q3 2013
CITYWIDE NET
ABSORPTION ...
RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON RETAIL MARKET
SALES ACTIVITY
Houston retail investment sales
activity incre...
RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON RETAIL MARKET
RENTAL RATES
The citywide average quoted
rental rate for all ...
RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON RETAIL MARKET
Accelerating success.
COLLIERS INTERNATIONAL
1223 W. Loop Sou...
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Q3 2013 Houston Retail Market Research Report

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Q3 2013 Houston Retail Market Research Report

  1. 1. www.colliers.com/houston Q3 2013 | RETAIL MARKET HOUSTON RETAIL MARKET INDICATORS Q3 2012 Q3 2013 CITYWIDE NET ABSORPTION (SF) -127K 120K CITYWIDE AVERAGE VACANCY 7.2% 6.8% CITYWIDE AVERAGE RENTAL RATE $14.49 $14.89 DELIVERIES (SF) 120K 196K UNDER CONSTRUCTION (SF) 1.1M 870K Houston’s retail market posted 120,000 SF of positive net absorption in the third quarter, bringing the year-to-date total to 1.6M SF. Some of the tenants who opened new locations during the third quarter include Fresh Market, Woodlands Oriental Rug Gallery, Monkey Joe’s, and CVS. Although 196,000 SF of new retail space delivered during the third quarter, Houston’s retail vacancy rate remained at 6.8%. Currently, there is 870,000 SF in Houston’s retail construction pipeline, which includes a 185,000-SF Walmart Supercenter located at I-45 and Wayside and a 59,000-SF Buc-ees located on the Gulf Freeway in Dickinson. The citywide average quoted rental rate for all property types increased 1.0% from $14.75 to $14.89 per SF between quarters and 2.8% from $14.49 in Q3 2012. Houston retail rental rates vary widely from $10.00 to $70.00 per square foot, depending on location, property type, and building class. The Houston metropolitan area added 80,700 jobs between August 2012 and August 2013, an annual increase of 3.0% over the prior year’s job growth. Further, Houston’s unemployment fell to 6.1% from 6.9% one year ago, and Houston area home sales increased significantly between May and August, 2013, up 16.2%. With continued expansion in the energy industry and a strong housing market, Houston’s economy is expected to remain healthy for both the near and long-term. ABSORPTION, NEW SUPPLY & VACANCY RATES 0% 2% 4% 6% 8% 10% 12% -500,000 0 500,000 1,000,000 1,500,000 2,000,000 Absorption New Supply Vacancy Houston’s Retail Market Vacancy Rate Holds Steady at 6.8% HOUSTON RETAIL MARKET RESEARCH & FORECAST REPORT Houston UNEMPLOYMENT 8/12 8/13 HOUSTON 6.9% 6.1% TEXAS 6.9% 6.3% U.S. 8.2% 7.3% JOB GROWTH ANNUAL CHANGE # OF JOBS ADDED HOUSTON 3.0% 80.7K TEXAS 2.4% 258.5K U.S. 1.6% 2.2M JOB GROWTH & UNEMPLOYMENT (Not Seasonally Adjusted)
  2. 2. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON RETAIL MARKET SALES ACTIVITY Houston retail investment sales activity increased between quarters with 228 sales transactions recorded in the third quarter compared to 205 in the second quarter. Total sales transaction volume totaled $181M and the average price per SF was $180. The average cap rate was 6.7%. Several of the more significant transactions that closed during the third quarter are highlighted at left. LEASING ACTIVITY Houston retail leasing activity in the third quarter reached 1.1M SF, bringing the year-to-date total to 3.1M SF, mostly due to renewals. Overall, transactions under 10,000 SF comprised the largest group of retail leases, with the market recording eleven leases over 10,000 SF and only five over 20,000 SF in the third quarter. A partial list of the leases signed during the third quarter are listed in the table below. COLLIERS INTERNATIONAL | P. 2 Woodlake Square Shopping Center 9600-9660 Westheimer, Houston, TX West Submarket RBA: 161,081 SF Built: 1970/2011 Buyer: AmREIT, Inc. Seller: AEW Capital Management Date: September 24, 2013 Price: $41.6M or $258/SF Cap: 5.7% 1 Renewal 2 Expansion 3 Sublease Grand Lakes Marketplace 6565 S Fry Rd, Katy, TX West Submarket RBA: 131,195 SF Built: 2013 Buyer: JLL Income PT Seller: Fidelis Realty Date: September 30, 2013 Price: $48.5M or $370/SF Cap: 5.3% League City Towne Center Gulf Freeway & FM 646, League City, TX NASA/Clear Lake Submarket RBA: 194,867 SF Built: 2008 Buyer: Excel Trust, Inc. Seller: Property Commerce Date: July 31, 2013 Price: $39.5M or $203/SF Cap: 7.15% RETAIL SALE TRANSACTIONS Park Plaza Centre 406 &414 W Grand Parkway, Katy, TX West Submarket RBA: 68,990 SF Built: 2005 Buyer: Texas Pacific Properties Seller: Thompson National Properties Date: July 29, 2013 Price: $5.7M or $83/SF Cap: 9.2% Building Name or Address Submarket SF Tenant Lease Date Pasadena Town Square Near Southeast 122,526 Ventech Sep-13 Pecan Park Plaza NASA/Clear Lake 37,800 Jumping World Aug-13 Corum Village FM 1960/I-45 20,579 Northwest Assistance Ministries Jul-13 3743-3747 Westheimer Rd. Inner Loop/ River Oaks 20,000 The Fresh Market Jul-13 3111 N Fry Rd Far Katy North 18,700 99 Cents Only Jul-13 610 W. Cavalcade St. Inner Loop/Heights 12,000 A-Z Nothing Over Dollar One1 Jul-13 Market at First Colony Stafford 8,646 Kee Mat Grocers Jul-13 Terramont Village Montgomery County 8,600 Woodlands Oriental Rug Gallery Jul-13 Missouri City Corners Stafford 7,954 Super 6 Buffet Aug-13 Village Plaza at Bunker Hill Near NW Spring Valley 7,803 Olive Garden Aug-13 Fairmont Kroger Center NASA/Clear Lake 6,650 First Choice ER Jul-13 Westchase Shopping Center Westchase 6,342 Mattress One Jul-13 Cypresswood Center Far North 5,439 Doghouse Pub1 Aug-13 Q3 2013 Retail Leases
  3. 3. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON RETAIL MARKET RENTAL RATES The citywide average quoted rental rate for all property types increased 1.0% from $14.75 to $14.89 per SF between quarters and 2.8% from $14.49 in Q3 2012. Class A in-line retail rental rates vary widely due to location and center type. Recent quoted rates for neighborhood centers, power centers and unanchored strip centers, range from $20.00 - $35.00 per SF (Class B and below can rent for $12.00 to $20.00 per SF) while theme/entertainment centers range from $25.00 - $35.00 per SF. Lifestyle centers and newly constructed strip centers in Class A locations such as High Street, Uptown Park and The Vintage range from $40.00 - $70.00 per SF. VACANCY & AVAILABILITY Houston’s retail vacancy held steady between quarters at 6.8%. By product type on a quarterly basis, power centers posted the largest decrease in vacancy, 40 basis points, followed by neighborhood centers decreasing 10 basis points. Community centers, outlet centers, and theme/ entertainment centers vacancy rates remained unchanged at 6.3%, 8.3%, and 33.8%, respectively. Strip centers vacancy rate increased 30 basis points, followed by lifestyle centers and single tenant properties, both increasing 20 basis points between quarters. Mall vacancy rates saw the smallest increase between quarters, 10 basis points. Houston’s retail construction pipeline contains 870,000 SF and third quarter deliveries totaled 196,000 SF. ABSORPTION & DEMAND Houston’s retail market posted 120,000 SF of positive net absorption in the third quarter, bringing the year-to-date positive net absorption to 1.6M SF. Some of the tenants that moved into space during the third quarter are listed in the table below. HOUSTON RETAIL MARKET STATISTICAL SUMMARY Q3 2013 ABSORPTION Tenant/ Submarket SF Occupied HEB Near North 25,106 The Fresh Market Inner Loop/River Oaks 20,000 Monkey Joes Sugar Land 16,800 Stepping Stone Charter School Sugar Land 11,000 CVS Near NW/Spring Valley 11,000 Pearland Primary Care Far South 8,762 Kee Mat Grocers Stafford 8,646 Woodlands Oriental Rug Gallery Montgomery County 8,600 Carrabba’s Italian Grill Near West 7,124 COLLIERS INTERNATIONAL | P. 3 Rentable Area Direct Vacant SF Direct Vacancy Rate Sublet Vacant SF Sublet Vacancy Rate Total Vacant SF Total Vacancy Rate Q3 2013 Net Absorption YTD 2013 Net Absorption Class A Rental Rates (in-line)* Strip Centers (unanchored) 32,379,938 3,383,044 10.4% 3,866 0.0% 3,386,910 10.5% (15,086) 134,905 $20.00-$35.00 Neighborhood Centers (one anchor) 68,563,764 7,198,019 10.5% 158,054 0.2% 7,356,073 10.7% 19,563 349,632 $20.00-$35.00 CommunityCenters (two anchors) 42,764,386 2,595,267 6.1% 94,012 0.2% 2,689,279 6.3% (6,990) 370,394 $18.00-$30.00 Power Centers (3 or more anchors) 19,919,325 1,005,410 5.0% 24,982 0.1% 1,030,392 5.2% 86,951 133,298 $20.00-$35.00 Lifestyle Centers 2,921,008 140,406 4.8% - 0.0% 140,406 4.8% (4,758) (7,479) $40.00-$70.00 Outlet Centers 1,593,814 132,724 8.3% - 0.0% 132,724 8.3% 0 (6,418) N/A Theme/Entertainment 676,840 228,813 33.8% - 0.0% 228,813 33.8% - - $25.00-$35.00 Single-Tenant 66,291,944 1,405,446 2.1% 51,816 0.1% 1,457,262 2.2% 46,058 502,729 N/A Malls 30,197,454 1,653,173 5.5% 58,539 0.2% 1,711,712 5.7% (5,725) 87,355 N/A Greater Houston 265,308,473 17,742,302 6.7% 391,269 0.1% 18,133,571 6.8% 120,013 1,564,416
  4. 4. RESEARCH & FORECAST REPORT | Q3 2013 | HOUSTON RETAIL MARKET Accelerating success. COLLIERS INTERNATIONAL 1223 W. Loop South Suite 900 Houston, Texas 77027 Main +1 713 222 2111 LISA R. BRIDGES Director of Market Research | Houston Direct +1 713 830 2125 Fax +1 713 830 2118 lisa.bridges@colliers.com The Colliers Advantage Enterprising Culture Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and a shared sense of initiative, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. When you choose to work with Colliers, you choose to work with the best. In addition to being highly skilled experts in their field, our people are passionate about what they do. And they know we are invested in their success just as much as we are in our clients’ success. This is evident throughout our platform—from Colliers University, our proprietary education and professional development platform, to our client engagement strategy that encourages cross-functional service integration, to our culture of caring. We connect through a shared set of values that shape a collaborative environment throughout our organization that is unsurpassed in the industry. That’s why we attract top recruits and have one of the highest retention rates in the industry. Colliers International has also been recognized as one of the “best places to work” by top business organizations in many of our markets across the globe. Colliers International offers a comprehensive portfolio of real estate services to occupiers, owners and investors on a local, regional, national and international basis. COLLIERS INTERNATIONAL | P. 4

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