Q1 2014 Retail Market Research Report

1. www.colliers.com/houston
Q1 2014 | RETAIL MARKET
HOUSTON RETAIL
MARKET INDICATORS
Q1 2013 Q1 2014
CITYWIDE NET
ABSORPTION (SF) 400K 573K
CITYWIDE AVERAGE
VACANCY 7.0% 6.6%
CITYWIDE AVERAGE
RENTAL RATE $14.72 $14.73
DELIVERIES (SF) 154K 445K
UNDER
CONSTRUCTION (SF) 585K 1.3M
Houston’s retail market posted 573,000 SF of positive net absorption in
the first quarter. Some of the tenants who opened new locations
during the quarter include Whole Foods Market, Spec’s, Rue21, Sears
Outlet Center, Jack’s Carpet, and Mattress One.
The average citywide vacancy remained unchanged from the previous
quarter at 6.6%. Currently, there is 1.3M SF in Houston’s retail
construction pipeline, which includes a 102,000-SF Kroger
Marketplace located just south of The Woodlands on Kuykendahl Rd
and W Rayford Rd, and an 80,000-SF HEB located on the north side of
FM 518, just west of Pearland Parkway.
The citywide average quoted rental rate for all property types
increased 0.3% from $14.69 to $14.73 per SF between quarters and
0.1% from $14.71 in Q1 2013. Houston retail rental rates vary widely
from $10.00 to $70.00 per SF, depending on location, property type,
and building class.
The Houston metropolitan area added 91,300 jobs between January
2013 and January 2014, an annual increase of 3.4% over the prior
year’s job growth. Local economists have forecasted 2014 job growth
to remain strong, adding between 68,000 and 72,000 jobs. Houston’s
unemployment fell to 5.6% from 6.9% one year ago. Houston area
home sales increased 8.35% between February 2013 and February
2014 and the average price of a single-family home rose 12.5% over
the year.
ABSORPTION, NEW SUPPLY & VACANCY RATES
0%
2%
4%
6%
8%
10%
12%
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
Absorption New Supply Vacancy
Houston’s Strong Economy Boosts Retail
Construction
HOUSTON RETAIL MARKET
RESEARCH & FORECAST REPORT
Houston
UNEMPLOYMENT 1/13 1/14
HOUSTON 6.9% 5.6%
TEXAS 7.0% 5.8%
U.S. 8.5% 7.0%
JOB GROWTH
ANNUAL
CHANGE
# OF JOBS
ADDED
HOUSTON 3.4% 91.3K
TEXAS 3.0% 330.9K
U.S. 1.7% 2.3M
JOB GROWTH & UNEMPLOYMENT
(Not Seasonally Adjusted)

2. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON RETAIL MARKET
SALES ACTIVITY
Houston’s first quarter retail
investment sales activity
included 76 sales transactions.
Total sales transaction volume
totaled $52M and the average
price per SF was $162. The
average cap rate was 7.6%.
Several of the more significant
transactions that closed during
the first quarter are highlighted
on the left.
LEASING ACTIVITY
Houston retail leasing activity in
the first quarter reached 1.2M
SF. Overall, transactions under
10,000 SF comprised the largest
group of retail leases, with the
market recording eleven leases
over 10,000 SF and only two
over 20,000 SF in the first
quarter.
A partial list of the leases signed
during the first quarter are listed
in the table below.
COLLIERS INTERNATIONAL | P. 2
Colony Plaza
4811 SH 6 S, Missouri City, TX
Stafford Submarket
RBA: 55,022 SF
Built: 1996
Buyer: Texas Colony Plaza, LLC
Seller: Everest Fund Ventures I, Ltd.
Date: March 3, 2014
Price: $8.0M or $145/SF
Cap: 9.5%
Waterside Commons
9102-9825 S Mason Rd, Richmond, TX
Far Southwest Submarket
RBA: 39,779 SF
Built: 2008
Buyer: Zenda Waterside Commons U.S.
Seller: Mason Grand, Ltd.
Date: March 18, 2014
Price: $8.85M or $222/SF
Cap: N/A
Windrose Plaza
20423 Kuykendahl Rd, Spring, TX
Far North Submarket
RBA: 28,715 SF
Built: 2005
Buyer: Summit Dental
Seller: American Spectrum Realty, Inc.
Date: January 6, 2014
Price: $5.75M or $200/SF
Cap: 8.15%
RETAIL SALE TRANSACTIONS
Tuscan Village Plaza
7214 FM 1488, Magnolia, TX
Montgomery County Submarket
RBA: 15,318 SF
Built: 2007
Buyer: Private Investor
Seller: 1488 Del Sul Investments LP
Date: March, 2014
Price: $3.4M or $222/SF
Cap: N/A
Building Name/Address Submarket SF Tenant Lease Date
Fairmont Junction Plaza Near Southeast 42,130 Bravo Ranch Supermarket Mar-14
Cypress Station Square Far North 31,622 Anthem College Jan-14
Portofino Center Montgomery County 22,500 Conn's Appliances Feb-14
Woodforest Shopping Center Pasadena/Galena Park 13,775 Chulas Jan-14
Quail Corner Stafford 12,779 King Dollar Feb-14
Pecan Park Plaza NASA/Clear Lake 12,500 Dollar Tree Feb-14
Uptown Park Uptown 11,384 Champps Americana1 Feb-14
Greenbriar Square Sugar Land 9,629 Pennywise Jan-14
E-1 - Sunrise Lake Village Far South 7,981 Title Boxing Club Feb-14
Tomball Marketplace Far Northwest 7,700 Five Below Jan-14
E-1 - Sunrise Lake Village Far South 6,736 Blue Lion Salon Studios Feb-14
Q1 2014 RETAIL LEASES
1
Renewal

3. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON RETAIL MARKET
RENTAL RATES
The citywide average quoted
rental rate for all property types
increased 0.3% from $14.69 to
$14.73 per SF between quarters
and 0.1% from $14.71 in Q1
2013.
Class A retail rental rates vary
widely due to location and center
type. Recent quoted rates for
community centers and power
centers range from $18.00 -
$35.00 per SF while theme/
entertainment centers range from
$25.00 - $35.00 per SF. Lifestyle
centers in Class A locations
such as High Street, Uptown
Park and The Vintage range from
$40.00 - $70.00 per SF. Strip
centers range from $24.00 -
$45.00 per SF and neighborhood
centers range from $20.00 -
$50.00 per SF.
VACANCY & AVAILABILITY
Houston’s retail vacancy
remained at 6.6% over the
quarter and fell 40 basis points
from 7.0% in Q1 2013. By
product type on a quarterly basis,
theme/entertainment centers
posted the largest decrease in
vacancy, 540 basis points,
followed by outlet centers
decreasing 180 basis points and
power centers decreasing 80
basis points. Strip center
vacancy dropped 60 basis points
and neighborhood center
vacancy remained unchanged.
Single-tenant, malls, community
centers, and lifestyle center
vacancy rose 10, 20, 70 and 170
basis points, respectively.
Houston’s retail construction
pipeline contains 1.3M SF and
first quarter deliveries totaled
445,000 SF.
ABSORPTION & DEMAND
Houston’s retail market posted
573,000 SF of positive net
absorption in the first quarter.
Some of the tenants that moved
into space during the first quarter
are listed in the table at right.
HOUSTON RETAIL MARKET STATISTICAL SUMMARY
COLLIERS INTERNATIONAL | P. 3
Q1 2014 ABSORPTION
Tenant/
Submarket
SF
Occupied
Sears Outlet Center
Southeast Outlier 33,494
Forgotten Angels
Southeast Outlier 15,300
Spec’s
Montgomery County 14,532
Rue21
Southeast Outlier 10,000
Pennywise
Sugar Land 9,629
Bee Busy Wellness
Center
Southwest 8,640
Five Below
Far Northwest 7,700
Adventure Kids
Playcare
Far New Territory 5,886
Urgent Care
Southeast Outlier 4,800
Rentable
Area
Direct
Vacant SF
Direct
Vacancy
Rate
Sublet
Vacant SF
Sublet
Vacancy
Rate
Total
Vacant SF
Total
Vacancy
Rate
Q1 2014
Net
Absorption
Q4 2013
Net
Absorption
Class A
Rental Rates
(in-line)*
Strip Centers (unanchored) 32,506,790 3,104,212 9.5% 6,305 0.0% 3,110,517 9.6% 143,978 169,170 $25.00-$45.00
Neighborhood Centers (one anchor) 68,150,367 6,813,371 10.0% 98,296 0.1% 6,911,667 10.1% 92,464 525,305 $20.00-$50.00
Community Centers (two anchors) 43,531,464 2,864,950 6.6% 49,357 0.1% 2,914,307 6.7% (133,012) 144,775 $18.00-$35.00
Power Centers (3 or more anchors) 22,515,243 846,614 3.8% 23,483 0.1% 870,097 3.9% 40,847 99,229 $18.00-$35.00
Lifestyle Centers 3,692,644 180,013 4.9% 33,789 0.9% 213,802 5.8% 33,490 4,758 $40.00-$70.00
Outlet Centers 1,899,333 239,988 12.6% - 0.0% 239,988 12.6% 34,231 (8,728) $20.00-$40.00
Theme/Entertainment 752,640 229,731 30.5% - 0.0% 229,731 30.5% 40,200 (41,118) $25.00-$35.00
Single-Tenant 67,722,661 1,482,070 2.2% 64,554 0.1% 1,546,624 2.3% 283,192 174,343 N/A
Malls 26,141,121 1,483,765 5.7% 54,750 0.2% 1,538,515 5.9% 37,219 54,882 N/A
Greater Houston 266,912,263 17,244,714 6.5% 330,534 0.1% 17,575,248 6.6% 572,609 1,122,616

4. RESEARCH & FORECAST REPORT | Q1 2014 | HOUSTON RETAIL MARKET
Accelerating success.
COLLIERS INTERNATIONAL
1233 W. Loop South
Suite 900
Houston, Texas 77027
Main +1 713 222 2111
LISA R. BRIDGES
Director of Market Research | Houston
Direct +1 713 830 2125
Fax +1 713 830 2118
lisa.bridges@colliers.com
The Colliers Advantage
Enterprising Culture
Colliers International is a leader in global real estate services,
defined by our spirit of enterprise. Through a culture of service
excellence and a shared sense of initiative, we integrate the
resources of real estate specialists worldwide to accelerate
the success of our partners.
When you choose to work with Colliers, you choose to work
with the best. In addition to being highly skilled experts in their
field, our people are passionate about what they do. And they
know we are invested in their success just as much as we are
in our clients’ success.
This is evident throughout our platform—from Colliers University, our proprietary education and professional development platform, to our
client engagement strategy that encourages cross-functional service integration, to our culture of caring.
We connect through a shared set of values that shape a collaborative environment throughout our organization that is unsurpassed in the
industry. That’s why we attract top recruits and have one of the highest retention rates in the industry. Colliers International has also been
recognized as one of the “best places to work” by top business organizations in many of our markets across the globe.
Colliers International offers a comprehensive portfolio of real estate services to occupiers, owners and investors on a local, regional,
national and international basis.
*Information herein has been obtained from sources deemed reliable, however its accuracy cannot be guaranteed.
COLLIERS INTERNATIONAL | P. 4