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Houston’s retail market remains a steady performer among the region’s commercial real estate sectors, supported by ongoing population and job growth. The vacancy rate edged down to 5.5 percent in Q1/26, reflecting continued stability in occupied space. Leasing activity moderated, with net absorption totaling 608,136 square feet following stronger activity in previous quarters. Average rents increased to $21.22 per square foot, maintaining an overall upward trend. Construction activity rose to 4.3 million square feet underway, indicating a measured but active development pipeline.
Vacancy rates have generally trended downward since ’21 as the economy recovered from Covid-19, before edging up through ’24 and early ’25 and stabilizing more recently. The rate was 5.5 percent in both Q1/25 and Q1/26, reflecting a modest softening from earlier lows but remaining within a stable range. Strong population growth and steady in-person shopping continue to support demand for retail space, even as consumer preferences evolve toward a mix of online purchasing and experiential retail.
The market posted 608,136 square feet of positive net absorption in Q1/26, following solid leasing activity in the prior quarter. While absorption has moderated from higher levels seen in earlier periods and showed some volatility over the past year, it remains positive, reflecting continued tenant demand alongside more measured expansion strategies by retailers.
At the end of Q1/26, total available retail space, including vacant space, occupied space being marketed for lease, sublease space, and space expected to become available, totaled 24.7 million square feet, up from 24.1 million square feet in Q1/25.
After several years of steady growth, retail rents in Houston have shown more moderate movement in recent quarters, with stronger increases in the second half of ’25 continuing into Q1/26. The average triple net (NNN) rent reached $21.22 per square foot in Q1/26, up from $20.55 in Q1/25 and representing a new high. These rates are quoted as NNN, meaning tenants are responsible for covering expenses such as property taxes, maintenance, utilities, and security. The recent trend suggests pricing remains firm, even as leasing activity reflects a more measured pace.
Prepared by Greater Houston Partnership Research
Leta Wauson, Research Director
