Dallas/Fort Worth has 4.2 million sf in line to deliver by year's end. San Antonio developers are pushing four million sf out of the ground. And Austin, with its 92.5% occupancy leading the metro pack, is getting an additional 2.5 million sf.
"The best thing about the construction is it is demand-based," says Ian Pierce, who is in the marketing and research division of Dallas-based Weitzman Group and Cencor Realty Services. "Nothing is getting built without the retailers in place."
The snapshots for each metro are:
Houston--a 134.2-million-sf inventory that's 88% occupied. The construction wave, with 1.5 million sf delivering by midyear, is 0.5% lower than yearend 2007 due to construction. Rents are as high as $50 per sf inside Loop 610 while class A shop space is getting in the mid- to high $20 per sf range while endcaps and out-parcels are pushing toward the $40 per sf mark.
Dallas/Fort Worth--a 167.9-million-sf inventory with 89.4% occupancy, up a tenth of point since the year began. Rents were unavailable, but it's a safe bet they closely follow Houston.
San Antonio--a 34.5-million-sf inventory, with occupancy at 91% or two-tenths lower than it was at yearend 2007. Class A rents for inline shop space range from $24 per sf to $30 per sf on a triple net annual basis while some "key projects" have topped $50 per sf.
Austin--a 38-million-sf inventory, with the 92.5% occupancy up 0.5% in the past six months. Class A inline spaces in high-traffic, anchored suburban centers range from $24 per sf to the mid-$30 per sf on a triple net annual basis. According to the Weitzman-Cencor report, the capital city's rates are being impacted by concessions, both free rent and finish-out allowances.
Houston's development pipeline is the highest it's been in seven years when six million sf delivered. There were 15 major projects under way. "They were coming off that incredibly strong economy of 2000," Pierce says.
And, history is repeating itself in 2008 with a handful of projects larger than 500,000 sf working toward completion. The largest one to deliver so far is the 427,000-sf Houston Premium Outlets in Cypress. At the end of this month, CBL & Associates Properties Inc. of Chattanooga, TN will cut the ribbon on the 1.2-million-sf Pearland Town Center at the intersection of Texas 518 and US Hwy. 288. It is projected to add 1,500 jobs and generate $250 million of annual sales.
Pierce admits Texas isn't immune to store closings, but backfills aren't too long in coming. An unofficial roster of Seattle-based Starbucks Corp. shows two stores in Houston and 10 statewide will be shuttered in its 600-store shutdown nationwide. Steve & Barry's, a Port Washington, NY-headquartered chain that's moved into a Chapter 11 bankruptcy, has 23 stores in the state.
"There are national closings, but the impact is being felt more in other markets that Texas," Pierce tells GlobeSt.com. "The Texas economy has been a stellar performer. And, we are not surprised that our Texas markets remain healthy given the strong economies of our major metro areas."
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