Houston retail remains a landlord’s market—tight, disciplined, and expensive. The metro’s average NNN rent held at $20.49/SF in Q3, a hair below its all-time high, while vacancy stayed flat at 5.6%. That balance reflects a decisive slowdown in new supply (0.70M SF delivered; –41% YoY) even as leasing cooled to 1.81M SF. Pricing power endures because construction restraint is meeting steady user demand. In other words: less new space, fewer rent cuts.

Leasing velocity moderated, but net absorption jumped to 812K SF as experiential and fitness users backfilled boxes. Recent move-ins: The Picklr (66.5K SF) in The Woodlands and EōS Fitness (51.1K SF) in Katy; Sky Zone (26.6K SF) signed in Pearland—proof that “experiential” is no longer a niche filler but a durable demand channel. A local broker put it plainly on a walk-through: “If the box has parking and visibility, a concept will find a way to monetize it.” For now, that keeps occupancy high and rent erosion minimal.

Deliveries fell to 0.70M SF in Q3 and the pipeline shrank to 2.5M SF (–11% QoQ; –23% YoY). Most projects are small neighborhood centers near new rooftops, not speculative power centers. That micro-scale approach limits near-term vacancy risk and supports flat-to-firm rents. Zoom out, and Texas still leads U.S. retail building, but the epicenter is North Texas—DFW’s pipeline tops ~7.1M SF—underscoring that Houston’s relative restraint is a feature, not a bug, for landlords’ pricing power. Ultimately, less local risk of overshoot.

Trade prints are sparse but telling: $337M in 12-month sales at an average 7.6% cap; transaction pricing averages $216/SF. Inner-Loop rents at $28.18/SF versus $17.00/SF in Southeast keep pro formas highly submarket-specific. On balance, we frame base cases with flat to +1% rent growth over the next 12 months and hold vacancy assumptions tight only for prime trade areas. Nationally, CBRE’s H1 Cap Rate Survey shows slight compression across property types, reinforcing a “stability” regime rather than a re-risking wave—helpful for exit yield assumptions but not a license for aggressive underwriting.

Deals are taking longer. Brokers report six-month timelines as tenants re-run occupancy cost math. Yet landlords can afford to wait: vacancy is low, and new supply is scarce. One Houston center manager described Saturday parking lots as “full by 10 a.m.,” but flagged margin strain among soft-goods tenants—prompting creative structures (e.g., modestly lower base with percentage-rent kickers) to align interests. In practice, small capex—façade refresh, LEDs, lot striping—continues to defend top-quartile rents. Still, watch insurance and taxes; expense creep is real. For now, discipline dominates.

Rents: Plateau near current levels; prime assets could clip +1–2% with turnover/mark-to-market, while outer-ring centers stay flat. Occupancy: Mid-5% vacancy holds if deliveries remain measured and bankruptcies stay contained. Capital: If the “stable to slightly lower” yield tone per CBRE persists, best-in-class grocery-anchored centers could see ~25 bps compression; secondary assets trade flat to wide. Risks: Insurance and tax inflation, consumer softness tied to energy volatility, and any renewed e-commerce share gains in soft goods. Upside: Continued experiential backfill and medical retail deepen foot-traffic resilience.

Stability isn’t relief—it’s discipline priced in.