TX retail development trends

from this morning's GlobeSt (7/14):

Last updated: July 11, 2008 11:44pm

Houston's 5M-SF Retail Pipeline Leading State
By Connie Gore

"HOUSTON-Feeding "shop till you drop" lifestyles, developers in all four Texas metros are in the throes of a retail construction frenzy. The Greater Houston market, with its cache of top-ranked economic indicators, has 4.9 million sf in various stages of construction, putting it at the head of the state's Big Four.

Dallas/Fort Worth has 4.2 million sf in line to deliver by year's end. San Antonio developers are pushing four million sf out of the ground. And Austin, with its 92.5% occupancy leading the metro pack, is getting an additional 2.5 million sf.

"The best thing about the construction is it is demand-based," says Ian Pierce, who is in the marketing and research division of Dallas-based Weitzman Group and Cencor Realty Services. "Nothing is getting built without the retailers in place."

The snapshots for each metro are:

Houston--a 134.2-million-sf inventory that's 88% occupied. The construction wave, with 1.5 million sf delivering by midyear, is 0.5% lower than yearend 2007 due to construction. Rents are as high as $50 per sf inside Loop 610 while class A shop space is getting in the mid- to high $20 per sf range while endcaps and out-parcels are pushing toward the $40 per sf mark.

Dallas/Fort Worth--a 167.9-million-sf inventory with 89.4% occupancy, up a tenth of point since the year began. Rents were unavailable, but it's a safe bet they closely follow Houston.

San Antonio--a 34.5-million-sf inventory, with occupancy at 91% or two-tenths lower than it was at yearend 2007. Class A rents for inline shop space range from $24 per sf to $30 per sf on a triple net annual basis while some "key projects" have topped $50 per sf.

Austin--a 38-million-sf inventory, with the 92.5% occupancy up 0.5% in the past six months. Class A inline spaces in high-traffic, anchored suburban centers range from $24 per sf to the mid-$30 per sf on a triple net annual basis. According to the Weitzman-Cencor report, the capital city's rates are being impacted by concessions, both free rent and finish-out allowances.

Houston's development pipeline is the highest it's been in seven years when six million sf delivered. There were 15 major projects under way. "They were coming off that incredibly strong economy of 2000," Pierce says." ....

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