Houston’s retail market is entering 2025 in a state of equilibrium, but signs of softening are evident.
Demand formation has slowed significantly, with annual absorption in 2024 hitting its lowest level since 2006. This downturn is primarily due to increased store closures, which have reached their highest level since 2018.
At the same time, new retail developments have outpaced demand over the past two years, leading to an uptick in available retail space.
Key Trends in Houston’s Retail Market
1. Rising availability rates: At 5.8%, Houston's retail availability rate is at a three-year high — contrary to the national trend, where availability remains near record lows. Much of this available space consists of older properties, with nearly 60% built before 2000.
2. Disparities in location & quality: Retailers seeking high-quality space in affluent areas have limited options. In the Galleria/Uptown Submarket, availability remains at a near-historic low of 2%.
3. Slowed development: High construction and financing costs have pushed retail groundbreaking to an all-time low. More than half of the 3.4 million square footage under construction is still available, yet prime retail space rarely makes it to the open market.
4. Retail rent pressures: Rising operating costs and a weaker consumer environment make tenants more resistant to rent hikes.
Retail rents in Houston have grown just 1.3% annually, below the national average of 1.8%. When adjusted for inflation, rent growth is actually negative.
However, with new supply slowing, rent growth could pick up again in late 2025 or early 2026.
Why Property Tax Appeals Are Crucial for Retail Owners
Despite Houston’s population growth, rising rents, store closures, and a cautious consumer environment have created financial pressures for retail tenants. This dynamic will likely impact property valuations — and, ultimately, property tax assessments.
If you own retail property in Houston, now is the time to appeal your property taxes!
Predictive trends suggest future sale prices will rise, and ensuring that your valuation aligns with market conditions can significantly impact your bottom line. The type of retail space you own — whether it’s in a high-demand area or an older, underperforming property — will significantly influence its assessed value and associated tax burden.
Working with Ownwell can help you navigate property tax appeals effectively, ensuring your property is assessed accurately and fairly. Given the current market environment, reducing your tax liability can make a meaningful difference in profitability and long-term value.
Act Now to Protect Your Investment
With shifting retail market conditions and a potential rebound in rent growth, appealing your property taxes can be a strategic move to safeguard your retail investment.
Book a free consultation with Ownwell today to explore how you can lower your property tax burden and maximize profitability in 2025 and beyond!
