Bob Young: DFW Looks Good, but Does the Rest of Texas Look Better?

Bob Young
Bob Young

Everyone in the North Texas commercial real estate business will agree when I say that the retail market is as strong as it has been in years. We’re at 90.5 percent occupancy—the highest rate we’ve seen in two decades. Construction is in line with demand, and rents are stable and rising.

But a look at other major Texas markets shows that they not only meet DFW’s good news, they exceed it.

Let’s look at Austin, the long-time poster child for a healthy Texas retail market.

As of mid-year 2014, the Austin-area retail market is reporting 95.5 percent occupancy. In fact, the metro area has maintained occupancy above 90 percent throughout the entire economic downturn. Austin’s retail market—with 44.2 million square feet—is much smaller than DFW’s 188 million square feet of inventory.

We salute our real estate friends to the south for their good fortune.

In Houston, the market is nearly as large as Dallas’. But thanks in part to an energy-based economy that is currently on fire, Houston is the strongest large-metro retail market in Texas with a 96 percent occupancy rate, based on an inventory of around 148.3 million square feet.

Key factors that help the retail market in Houston include its position as the No. 1 job generator in the country and a housing market that ranks as one of the nation’s strongest.

In San Antonio, the retail market occupancy at midyear reached 92.5 percent—a gain of 2.5 percentage points over the past 12 months. San Antonio’s total inventory equals 40.2 million square feet.

Without a doubt, though, all of our major metro areas are reporting their healthiest numbers in years. In markets as dynamic as ours, anything near or past the 90 percent marker is great.

And thanks to construction that remains demand-driven, we should see this healthy balance of supply and demand continue.

Look at the new retail space set to open in calendar-year 2014 in our markets:

  • Austin: 1.1 million square feet
  • Houston: 1.6 million square feet
  • San Antonio: 1.5 million square feet
  • Dallas-Fort Worth: 1.9 million square feet

That’s only 6.1 million square feet total for the state’s four major metro markets. Go back a decade or so, and it wasn’t unusual to see just one of our markets add that much space or more in a single year.

This indicates that we not only have pretty strong retail markets in Texas, but we’re also likely to keep them that way.

To read the entire report, please click here.

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