Houston Retail Market Report
Macroeconomics: Federal Funds Rate
The Fed met on March 20th, 2024, which marked its 5th consecutive meeting, stating that they will maintain the federal funds rate at the current rate (5.25-5.5%). Jerome Powell seems to be set on keeping the current rate until inflation is back at 2%, which is the target. Some of the major indices that have backed up Jerome Powell’s reasoning for keeping the rates steady are the labor market and the inflation data, which came back higher than expected. These two factors have kept the current federal funds rate at its highest in 22 years.
In better news, according to the CME Group’s predictions, there is a 63.7% chance that there will be a 25 BPS cut in June, with an 80% chance of a 25 or more BPS cut in July. Typically, the effects of these rate cuts lag and will not drastically affect pricing in the short term. However, transaction volume is expected to increase once lending becomes more appealing. With more optimism in the market, the 10-year treasury will likely drop, and banks will be more eager to lend after these events, motivating buyers who have sat on the sidelines to lace up and get back in the game.
Microeconomics: Houston Retail
Transaction Velocity in Q1 2024:
- There have been 30 (trackable) retail properties that have sold
- In Q1 2023, there were 28 deals traded indicating a pace similar to last year for Q2 transactions.
Sales Comparables:
- Average Sale Price: $3.6 Million
- Average Price Per Square Foot: $189 Feet
- Total Sales Volume: $58,000,000
- Average CAP: 6.40%
Houston Agent Activity: Joshua Longoria
Joshua Longoria successfully closed two trophy properties in Houston Heights, where the transaction velocity was minimal. The agent is proud to say he had a 100% market share in Q1 for deals in that submarket. As well as a 6% market share for deals that traded in Houston. Joshua set a record for price per square foot on Someburger which is a 300-square-foot building at $3,000 a square foot. As for Moonshine Deck, Joshua generated countless offers and put the deal under contract only a month and a half after listing the property. This is a testament to the Matthews™ database and knowledge of the best buyers for the asset.
Joshua Longoria Agent Insight
“Last year was an extremely tough real estate market. However, I believe we are through the worst of it and are climbing back to normalcy. I am eager to see how the Fed’s rate cuts affect the 10-year treasury, thus affecting real estate velocity. I have already begun to feel the excitement from talking to landlords and we are seeing the activity pick up already. We are confident that the listings we were hired to sell this quarter will get across the finish line in Q2 as we push to pick up some more listings to add to the pipeline. When times get tough, we here at Matthews™ are designed to work that much harder to outwork our competition.”
