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6.3-Mil SF in New Retail Possibly Risky for Market

HOUSTON-Analyst Bill Forrest of Revac Inc. says the existing 6% retail vacancy could rise a couple of points as developers bring out more than the double the city's average. Some 6.3 million sf is due to deliver at 35 retail centers.

By Jennifer Brenner Andrade | Updated on May 08, 2001

HOUSTON-Bill Forrest, president of Houston-based Revac Inc., is concerned retail vacancy will spike a couple points from its current 6%. At the crux of his concern are 35 projects totaling 6.3 million sf due to deliver this year, more than double the city’s average.

Forrest tells GlobeSt.com that the city’s annual average is about three million sf. He fears this staggering amount of space, coupled with the yearly absorption rate of 4.8 million sf, will drive the vacancy rate up two or three more points. He also feels the retail’s stabilized rental rates may make it harder for new centers to drive up rates to cover construction costs.

In his annual shopping center market survey, Forrest predicts that nothing catastrophic will occur, but does take note of the quick impact that an economic downturn has on the retail industry. He also says that it could impact underwriting decisions that are based on national and not local levels although Houston is enjoying a counter cyclical boost as a result of its energy industry boom. The end result is the point spread could be higher when developers try to snag permanent financing.

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