The retail market in Houston saw a slight increase in vacancy rates in the third quarter of 2017 according to the document. Absorption decreased 66% from the previous quarter while net absorption was 438,000 square feet. Hurricane Harvey in August 2017 disrupted supply chains and retail spending but consumer spending increased in September to replace damaged items. The average quoted retail rental rate in Houston decreased slightly from the previous quarter.

1. Houston’s retail market sees a slight uptick in vacancy in
the third quarter
Research &
Forecast Report
HOUSTON | RETAIL
Q3 2017
Lisa Bridges Director of Market Research | Houston
Houston’s retail market activity slowed during the third quarter but still
remains healthy despite a decrease in absorption and a slight uptick
in vacancy. In August 2017, Houston faced one of the worst natural
disasters in history. Hurricane Harvey, a Category 4 hurricane,
slammed the Texas coast and dumped over 50 inches of rain in
parts of Houston. The event caused widespread flooding, destroying
homes, businesses and infrastructure. The retail sector saw supply
chain interruptions which halted distribution logistics for a week or
more. Ships carrying consumer goods were delayed due to ports
shutting down and local distribution facilities could not get products
delivered to consumers. A report by First Data shows that retail
spending increased the week before the hurricane, but plummeted
58.7% week-over-week and 43.7% year-over-year in Houston and
its surrounding areas at the peak of the hurricane. According to the
Department of Commerce, September saw a slight rise in consumer
spending, mostly from purchases of replacement items damaged by
Harvey.
According to the U.S. Bureau of Labor Statistics, the Houston MSA
created 53,500 jobs (not seasonally adjusted) between August
2016 and August 2017, an annual growth rate of 1.8%. Industry
sectors that added jobs include: Mining and Logging, Manufacturing,
Professional and Business Services, Health Care and Social
Assistance, and Educational Services.
Summary Statistics
Houston Retail Market Q3 2016 Q2 2017 Q3 2017
Vacancy Rate 5.2% 5.4% 5.6%
Net Absorption (SF)
(million square feet)
1.8M 1.3M 0.4M
New Construction (SF)
(million square feet)
1.3M 0.8M 0.6M
Under Construction (SF)
(million square feet)
4.3M 1.5M 2.8M
Asking Rents
Per Square Foot Per Year
Average NNN $15.23 $15.17 $14.88
Neighborhood Centers $14.54 $14.74 $14.51
Strip Centers $17.80 $18.15 $18.58
The above asking rents are an average of all property types and classes that are currently listed with
an asking rate. This average does not include properties that are fully leased or that do not list an
asking rate. Please see page 2 of this report for an expanded discussion of retail rental rates.
Market Indicators
Relative to prior period
Annual
Change
Quarterly
Change
Quarterly
Forecast*
VACANCY
NET ABSORPTION
NEW CONSTRUCTION
UNDER CONSTRUCTION
*Projected

2. PGIM Real Estate purchased LaCenterra at Cinco Ranch in
September 2017 from Vista Houston for $143.4 million or $347
per SF, based on a 5.5% cap rate. The 143,000 square foot,
two story shopping center was 97% leased at the time of sale.
Some of the tenants in the center include Gymboree, Eddie
Bauer, Jeans Couture and Cold Stone Creamery. A 45,000
square foot expansion is set to be completed early next year.
5th Stream Realty purchased Center at Park Lakes located at
9025 N Sam Houston Pky E from Satya, Inc. in August 2017.
The 13,976 square foot strip center sold for $2.75 million or
$197 per SF. The property was listed for $2.85 million based
on a 7.28% cap rate.
CENTER AT PARK LAKES
LACENTERRA AT CINCO RANCH
2 Houston Research & Forecast Report | Q3 2017 | Retail | Colliers International
Vacancy & Availability
Houston’s average retail vacancy rate increased 20 basis points from
5.4% to 5.6% over the quarter and by 40 basis points from 5.2% in
Q3 2016. At the end of the third quarter, Houston had 15.7M SF of
vacant retail space on the market. Among the major property types,
single-tenant retail had the lowest vacancy rate of 1.6%, followed by
theme/entertainment at 2.3%, lifestyle centers at 3.2%, malls at 3.9%
and power centers at 4.4%. The highest vacancy rate is among outlet
centers at 11.8% and the largest amount of vacant space by square
feet is among neighborhood centers.
There is currently 2.8M SF of retail space under construction of which
55.7% is pre-leased. The majority of the projects under construction
are located in the outlying suburban submarkets adjacent to rapidly
growing residential developments. Some of those projects include
Waller Town Center in the Far Northwest submarket, The Village
at Riverstone in the Far New Territory submarket, Buffalo Springs
Marketplace in the Montgomery County submarket and University
Commons in the Far Southwest submarket.
Absorption & Demand
Houston’s retail market posted 438,000 square feet of positive net
absorption in the third quarter, a 66% decrease from the previous
quarter. Some of the larger tenants that moved during the third
quarter are listed in the table below.
TENANT SF OCCUPIED SUBMARKET
Kroger 100,000 Far North
Academy Sports & Outdoors 62,943 Far North
Hobby Lobby 55,000 Far North
Jumping Jaks 40,357 Far North
Altitude Trampoline Park 40,000 Far Southwest
Rental Rates
According to CoStar, our data provider, Houston’s citywide average
quoted retail rental rate for all property types decreased between
quarters from $15.17 per SF NNN in Q2 2017 to $14.88 per SF
NNN. These average rental rates are typically much lower than
actual deal rates since they include all retail property types and
classes, the majority of those properties are not well leased and are
listed with discounted asking rates. According to Colliers’ internal
data, Class A in-line retail rental rates can vary widely from $30.00
to $85.00 per SF, depending on location and property type.
Sales Activity
Sources: Real Capital Analytics
Q3 2017
NO. OF PROPERTIES: 37
TOTAL SF: 2.0M
AVERAGE $/SF: $323
AVERAGE CAP RATE: 6.6%
Job Growth & Unemployment
(not seasonally adjusted)
UNEMPLOYMENT 8/16 8/17
HOUSTON 5.7% 5.2%
TEXAS 4.9% 4.5%
U.S. 5.1% 4.5%
JOB GROWTH
Annual
Change
# of Jobs
Added
HOUSTON 1.8% 53.5K
TEXAS 2.4% 286.3K
U.S. 1.5% 2.1M
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
$14.00
$14.20
$14.40
$14.60
$14.80
$15.00
$15.20
$15.40
$15.60
$15.80
$16.00
Retail Rental Rate and Vacancy Percentage
Houston, TX
Avg Quoted Rent Avg Vacancy
*Vacancy percentage includes direct and sublease space.

3. 3 Houston Research & Forecast Report | Q3 2017 | Retail | Colliers International33
Leasing Activity
Houston’s retail leasing activity, which includes renewals, decreased quarterly from 1.4M square feet in Q2 2017 to 1.2M square feet in Q3
2017. Some of the tenants that signed leases during the third quarter are listed in the table below.
Market Summary
Q3 2017 Top Retail Lease Transactions
BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE
Katy Pin Oak Shops & Pads Far Katy South 10,170 The Learning Experience
Academy of Early Education
Sept-17
Grand Parkway Marketplace II Far North 10,000 Blue Lion Salon Studios Sept-17
The Gardens Retail Center FM 1960/I-45 8,648 Dollar Tree Sept-17
Lakes on Eldridge Centre Northwest 6,300 Love & Art Day Care Sept-17
Meyerland Plaza Shopping Center Southwest 5,422 Navy Federal Credit Union Sept-17
Copperwood Village Far Katy North 5,000 Carters Sept-17
Market at Town Center Southwest 4,846 City Gear Sept-17
Q3 2017 Retail Market Statistical Summary
PROPERTY TYPE
RENTABLE
AREA
DIRECT
VACANT SF
DIRECT
VACANCY
RATE
SUBLET
VACANT
SF
SUBLET
VACANCY
RATE
TOTAL
VACANT SF
TOTAL
VACANCY
RATE
3Q17 NET
ABSORPTION
CLASS A RENTAL
RATES (IN-LINE*)
Strip Centers (unanchored) 35,773,891 3,232,510 9.0% 24,417 0.1% 3,256,927 9.1% 10,443 $27.00-$45.00
Neighborhood Centers (one anchor) 71,572,850 6,595,121 9.2% 69,384 0.1% 6,664,505 9.3% 76,406 $28.00-$46.00
Community Centers (two anchors) 47,169,154 2,251,998 4.8% 54,292 0.1% 2,306,290 4.9% 179,082 $28.00-$45.00
Power Centers (three or > anchors) 27,622,955 1,215,940 4.4% 4,300 0.0% 1,220,240 4.4% 99,760 $28.00-$45.00
Lifestyle Centers 5,316,860 165,943 3.1% 2,700 0.1% 168,643 3.2% 17,770 $40.00-$85.00
Outlet Centers 1,330,725 150,456 11.3% - 0.0% 150,456 11.3% (9,300) $20.00-$40.00
Theme/Entertainment 499,468 11,638 2.3% - 0.0% 11,638 2.3% 1,121 $25.00-$35.00
Single-Tenant 72,268,637 1,108,339 1.5% 57,463 0.1% 1,165,802 1.6% 91,891 N/A
Malls 23,908,876 922,004 3.9% - 0.0% 922,004 3.9% (29,255) N/A
GREATER HOUSTON 285,463,416 15,653,949 5.5% 57,463 0.0% 15,866,505 5.6% 437,918
U.S. seaports saw an increase in
waterborne shipments, rising
4.9% in September over last year
as retailers stock up inventories
ahead of the upcoming holiday
shopping season.
The Wall Street Journal

4. 4 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
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4 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2017 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
Colliers International | Houston
1233 West Loop South, Suite 900
Houston, Texas 77027
+1 713 222 2111
colliers.com/texas/houston
FOR MORE INFORMATION
Lisa Bridges
Director of Market Research | Houston
+1 713 830 2125
lisa.bridges@colliers.com
115.6M SF
15.3M SF
Q3 2017 Houston Retail Highlights