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Houston Retail Market Report 4Q-2012

Houston Retail Market Report 4Q-2012

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Published by Coy Davidson
Retail Real Estate Market Report - Houston
Retail Real Estate Market Report - Houston

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Categories:Types, Business/Law
Published by: Coy Davidson on Jan 25, 2013
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07/10/2013

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www.colliers.com/houston
Q4 2012 | RETAIL MARKET
MARKET INDICATORS
YE 2011YE 2012
CITYWIDE NETABSORPTION (SF)
1.8M 1.2M
CITYWIDE AVERAGEVACANCY
7.2% 7.0%
CITYWIDE AVERAGERENTAL RATE
$15.13 $14.34
DELIVERIES (SF)
625K 1.1M
UNDER CONSTRUCTION(SF)
617K 451K
1
HoustonsRetailMarketAbsorptionBoostedbyYear-EndPush
Houston’s retail market posted 1.1M square feet of positive net absorption in Q4,bringing the year-end 2012 total to 1.2M SF. The opening of Phase 1 of the TangerOutlet Center in Texas City, as well as the opening of the new HEB in Cypress,contributed over 534,000 SF to the fourth quarter’s positive net absorption. Othertenants that moved during the fourth quarter include American Girl, WellborneCinema, Bone Daddy’s and Serious Cigars.Houston’s retail vacancy rate decreased from 7.2% to 7.0% between quarters aswell as over-the-year. Due to the large amount of new inventory deliveries,Houston’s retail vacancy only decreased 2% between quarters, despite thesignificant positive absorption.The citywide average quoted rental rate for all property types is $14.34 per squarefoot; however, rental rates vary widely from $10.00 to $70.00 per square footdepending on location and property type and class.The Houston metropolitan area added 85,000 jobs between November 2011 andNovember 2012, an annual increase of 3.1% over the years prior job growth.Further, Houston’s unemployment rate fell to 5.8% from 7.3% one year ago whichhas bolstered annual home sales in the Houston area. With continued expansion inthe energy industry and a strong housing market, Houston’s economy is expectedto remain healthy for both the near and long-term.
ABSORPTION, NEW SUPPLY & VACANCY RATES
RESEARCH & FORECAST
REPORT
0%2%4%6%8%10%12%-500,0000500,0001,000,0001,500,0002,000,000Absorption New Supply Vacancy
JOB GROWTH & UNEMPLOYMENT
(Not Seasonally Adjusted)
UNEMPLOYMENT 11/11 11/12Houston 7.3% 5.8%Texas 7.2% 5.8%U.S. 8.2% 7.4%JOB GROWTHANNUALCHANGE# OF JOBSADDEDHouston 3.2%85KTexas 2.6%274KU.S. 1.4%1.9M
 
RESEARCH & FORECAST REPORT | Q42012 | HOUSTON RETAIL MARKET
2
RentalRates
The citywide average quoted rental rateincreased from $14.30 to $14.34 perSF NNN between quarters anddecreased from $15.13 over the year.Class A in-line retail rental rates varywidely due to location and center type.Recent quoted rates for unanchoredstrip centers range from $20.00 -$35.00 per SF (Class B and below canrent for $12.00 to $20.00 per SF)while power centers with three ormore strong anchors range from$10.00 - $35.00 per SF. Lifestylecenters and newly constructed stripcenters in Class A locations such asHigh Street, Uptown Park and TheVintage range from $40.00 - $70.00per SF.
Vacancy&Availability
Houston’s retail vacancy decreasedfrom 7.2% to 7.0% in the fourthquarter. By product type on a quarterlybasis, outlet centers posted the largestvacancy rate decrease from 10.1% to7.8%, 230 basis points. Strip centers,neighborhood centers and theme/entertainment vacancy rates remainedunchanged between quarters.Houston’s retail construction pipelinecontains 451,000 SF, of whichapproximately 31% is pre-leased.Fourth quarter deliveries totaled756,000 SF.
Absorption&Demand
Houston’s retail market posted 1.1M SFof positive net absorption in the fourthquarter bringing the year-end total to1.2M SF. The opening of Phase 1 of theTanger Outlet Center in Texas City aswell as the opening of the new HEB inCypress contributed over 534,000 SFto the fourth quarters positive netabsorption.Other notable tenants that moved intotheir space during the fourth quarterinclude: Academy Sports, Kroger, LAFitness, and Thrift Outlet as seen in thetable to the right.
HOUSTON RETAIL MARKET STATISTICAL SUMMARY
Q42012 ABSORPTION
TenantSFOccupied
Tanger Outlet Center Ph1 350,000HEB 184,083Academy Sports 72,979Kroger 48,501LA Fitness 45,000Thrift Outlet 26,40299¢ Store 18,119American Girl 17,685Wellborne Cinema 15,180Ogle School 11,468JBs Multi Events 10,300Velvet Restaurant 8,878Bone Daddys 7,000Serious Cigars 7,000
RentableAreaDirectVacant SFDirectVacancyRateSubletVacant SFSubletVacancyRateTotal VacantSFTotalVacancyRateQ4 2012 NetAbsorption2012 YTDNetAbsorptionClass A RentalRates (in-line)*
Strip Centers (unanchored)31,381,2693,247,52310.3%22,9510.1%3,270,47410.4%35,161(89,158)$20.00-$35.00 Neighborhood Centers (one anchor)68,820,5077,301,62610.6%156,6000.2%7,458,22610.8%115,789(335,197)$20.00-$32.00 Community Centers (two anchors)40,772,1472,548,7436.3%128,0710.3%2,676,8146.6%125,930212,540$15.00-$30.00 Power Centers (3 or more anchors)20,297,712874,7974.3%71,1900.4%945,9874.7%93,299361,102$10.00-$35.00 Lifestyle Centers4,618,124275,2176.0%-0.0%275,2176.0%9,50944,237$40.00-$70.00 Outlet Centers1,573,627122,0067.8%-0.0%122,0067.8%351,610353,673N/A Theme/Entertainment 653,840224,80434.4%-0.0%224,80434.4%--$25.00-$35.00 Single-Tenant63,079,1421,491,1772.4%33,6600.1%1,524,8372.4%364,472444,792N/A Malls29,487,9351,770,1646.0%58,5390.2%1,828,7036.2%31,304164,400N/A
Greater Houston260,684,30317,856,0576.8%471,0110.2%18,327,0687.0%1,127,0741,156,389
 
RESEARCH & FORECAST REPORT | Q42012 | HOUSTON RETAIL MARKET
SALESACTIVITY
Houston retail investment sales activityincluded 72 recorded transactions, witha total dollar volume of approximately$115.4M, averaging $116 per SF withan average capitalization rate of 8.7%.Some of the more significanttransactions that closed during thefourth quarter include:Becar Venture purchased the 68,780-SF West Loop Plaza from Cathay Bankin December for $9.9M. Theneighborhood center, located in theInner Loop River Oaks submarket, was100% leased at the time of sale andwas purchased as an investment.Golfsmith and Mattress Giant are thecenter’s anchor tenants.RioCan REIT purchased the 180,000-SFLouetta Central Shopping Center,located in the North/Spring Creeksubmarket, from URDANG & RCGVentures in November for $26M. Majortenants in the center include Michael’s,Famous Footwear, and Kohl’s.First Washington Realty purchased the125,200-SF Woodlands CrossingShopping Center from Realm Realty inDecember for $43.2M. Theneighborhood center, located in TheWoodlands and Montgomery Countysubmarket, was purchased as aninvestment. Some of the center’smajor tenants include Trader Joe’s, AceHardware, 24-Hour Fitness, andPETCO.West Houston Retail LLC purchased afour-property portfolio from Satya, Inc.for approximately $15.8M in November.The portfolio included four strip centerstotaling 71,374 SF and were located inRichmond, Cypress and Houston, TX.The portfolio was purchased as aninvestment. Some of the tenants in thecenters include Quick Weight Loss,Subway, New York Pizzeria, and StateFarm.
LEASINGACTIVITY
Houston retail leasing activity for fourthquarter 2012 totaled 841,061 SF in 323transactions, compared to 346transactions totaling 866,000 SF oneyear ago. Overall, transactions under10,000 SF comprised the largest groupof retail leases, with the marketrecording only nine leases over 10,000SF and two over 20,000 SF in thefourth quarter.
3
RETAIL SALE TRANSACTIONS
West Loop Plaza
1
3005-3115 West Loop South, Houston, TXInner Loop River Oaks Ret Submarket
RBA: 68,780 SFBuilt: 2006Buyer: Becar VentureSeller: Cathay BankSale Date: December 5, 2012Sales Price: $9.9MSales Price PSF: $144
Woodlands Crossing10864-10868 Kuykendahl Rd., TheWoodlands, TXMontgomery County Ret Submarket
RBA: 125,200 SFBuilt: 2012Buyer: First Washington RealtySeller: Realm RealtySale Date: December 19, 2012Sales Price: $43.2MSales Price PSF: $345
1
Colliers International Transaction 
Building name/address Submarket Tenant Lease date
Point Nasa Shopping CenterNASA/Clear Lake47,900Conn'sOct-12Cypress Landing Shopping CenterNorthBelt/Greenspoint28,193Gold's GymDec-12Pasadena Town PlazaNear Southeast20,558GoodwillNov-12Fondren Southwest VillageSouthwest16,579Palais RoyalOct-12Westheimer CommonsWest/Far West14,500Shoe CarnivalOct-12Meadow Park Shopping CenterSoutheast Outlier14,000Family DollarOct-12Cypress Station SquareFar North13,400Davita DialysisNov-12Pasadena Town PlazaNear Southeast8,702Anna's LinensNov-12Cypress Station Shopping CenterNorth FM 1960/I-457,344The Pour HouseOct-12Village Green Shopping CenterWest/Far West5,900Snooker 147Oct-12908 CongressCBD5,400Batanga RestaurantOct-12West Loop Market CenterInner Loop/River Oaks4,700S FactorOct-12River Oaks Shopping CenterInner Loop/River Oaks4,375J. JillOct-12
SF
Q4 2012 Top Retail Leases

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