Quarterly Snapshot

Houston's retail construction pipeline remains robust, with approximately 3.4 million SF under development, primarily in the Far Northwest (Cypress, Bridgeland, Tomball and Magnolia), Far North (Conroe, Huntsville, Willis, and New Waverly), and Katy areas, driving an increase in upcoming supply. However, in 2Q25, a lack of absorption led to a 10-basis point rise in the overall vacancy rate, from 5.4% to 5.5%. This slight increase in vacancy is due to new spaces being filled by new construction rather than the absorption of existing vacancies. While supply and demand had been in close balance in recent quarters, with most of the net absorption going into newly delivered properties, the market is now adjusting as retailers take a more cautious approach amid economic uncertainties. As tenant absorption lags behind the influx of new space, vacancy rates are rising, suggesting potential shifts in leasing strategies and tenant demand moving forward.

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