Houston Net Lease Retail Market Report
Market Overview
Houston retail submarkets Southeast Outlier and NASA/Clear Lake serve as areas with optimal growth potential, as Houston draws in individuals from industries like aerospace, biotechnology, and tourism. Just 20 miles southeast of downtown Houston, Southeast Outlier is an affordable submarket home to many large malls, including Clear Lake Center, Baybrook Mall, and Tanger Outlets, all three over 300,000 square feet and attractive to many shoppers all over Houston. Meanwhile, NASA/Clear Lake sits 25 miles southeast of downtown Houston, popular for its proximity to water and relative affordability.
Southeast Outlier by the Numbers
- Deliveries (SF): 93.9K
- Net absorption (SF): 150K
- Vacancy rate: 2.8%
- Asking rent growth: 1.1%
- Sales volume: $23M
Last 12 Months | Source: CoStar Group
Market Performance
As of Q3 2024, the vacancy rate reached a near-record low of 3.8%, significantly lower than the Houston average of 4.9%. The total inventory in the Southeast Outlier market is approximately 16.8 million square feet, making it one of the largest inventories in Houston. The asking rents are $23 per square foot, aligning with the Houston metro average. The annual rent growth is 1.1%, down from a record peak of 5.5% in early 2023. This submarket is among Houston’s most active investment markets, with an average of 44 trades annually over the past five years.
Of the 44 trades annually over the past five years, 30 occurred in the last 12 months.
NASA/Clear Lake by the Numbers
- Deliveries (SF): 197K
- Net absorption (SF): -23.3K
- Vacancy rate: 5.9%
- Asking rent growth: 1.1%
- Sales volume: $9.7M
Last 12 Months | Source: CoStar Group
Market Performance
NASA/Clear Lake is one of Houston’s most active retail submarkets in terms of supply due to land availability and affordability. However, leasing activity has slowed in recent months, with the availability rate at 5.3% as of Q3 2024, well below the 10-year average of 6.8%. Smaller tenants, under 5,000 square feet, remain the most active in the retail market. Vacancy sits at 5.9%, remaining in line with the 10-year average of 5.4%. Rent averages out at $20.00 per square foot, about $3 below the metro average. As of Q3 2024, annual rent growth is at 1.1%. Looking ahead, a more narrow pipeline of construction is expected as 34,000 square feet are underway. Nonetheless, the NASA/Clear Lake submarket has averaged 120 trades annually over the past five years, including 62 in the past 12 months, proving the market’s ability to stay active despite availability rates.
NASA/Clear Lake has the second-largest retail inventory among Houston’s 47 submarkets, with 30.4 million square feet.
