Texas

Elevated consumer spending tied to a strong job market in the greater Houston area is driving retail investment and tenant demand in suburban and urban submarkets alike. As a result, it’s one of the nation’s top MSAs for retail development, with more than 3 million-plus square feet under construction market-wide. From an investment perspective, single-tenant and ground-leased assets remain favorable with investors. E-commerce-resistant tenants like fitness, restaurants, automotive service centers, car washes/detailing and dialysis facilities command the most attention with cap rates between the mid-5 to mid-6 percent range. Cap rates tend to be 25 to 50 basis points lower for ground leases because there is no landlord responsibility. Credit, guarantee, location, lease term and landlord responsibility are the biggest factors affecting value. Following Grand Parkway In greater Houston, the majority of retail development recently has been in high-growth submarkets along the 180-mile Grand Parkway/TX 99, which loops through seven counties. National brands like Target, Ross Dress for Less, T.J. Maxx, Burlington, Ulta Beauty and Five Below are continually scouting sites in high-density suburban markets along the Grand Parkway. The exponential growth in the entertainment, fitness, dining and medical/healthcare sectors is an equally strong catalyst for retail and mixed-use development …