LAS VEGAS—As retail vacancies plummet in Houston, asking rental rates are spiking. That's just some of the good news shaping up in what was once a one-horse (read: oil-dependent) town. Houston, on the world stage as a primary target for international investors, is enjoying a major uptick in its retail. So says Nick Hernandez, managing director at Transwestern, in this exclusive video interview from the show floor of RECon last month.

You can click on the video to hear Nick explain what is being built as developers again roll up their sleeves and get to work and where they're building. He also discusses the millennial movement and how that impacts the grocery business and much more.

But, as evidenced by the accompanying chart, rents are approaching $18 a foot as vacancies hover around 7.5%. And note the precipitous drop from roughly 11.5% that the city sustained in Q4 of 2011. Clearly the market is back.

And the good times are also felt in the sales arena, where Transwestern reports activity topping $570 million, representing some 37 properties and more than 3 million square feet. Average cap rates were 6%, compared to the overall 6.8% nationally.

Naturally, in virtually every market around the country, the hottest retail sector is clearly the CBD, ground zero for the live, work, play movement, and Houston is no different. The Inner Loop, which encompasses the CBD as well as the Bellaire/West U, Galleria/Uptown, River Oaks, Heights and East End submarkets, boasts the MSA's lowest vacancy rate, 5.7%, and as would follow, one of the highest construction levels in the city—332,489 square feet. This is bested only by the Northwest sector (at 657,000) and the West sector (416,969).

[IMGCAP(1)]

It should be noted that, at the other end of the spectrum, the East submarket is saddled with the MSA's highest vacancy rate, 9.2, with the Northeast and Southeast sharing dubious honors as the second highest vacancy areas, each at 8%. Still, the retail vacancy picture throughout the city remains in the single digits.

So, as the Houston market continues its upward retail trajectory, what will be the next big thing? Power centers, says Hernandez. Why? And where? You'll just have to go to the video to find out.