1. www.colliers.com/houston
Q1 2013 | RETAIL MARKET
MARKET INDICATORS
Q1 2012 Q1 2013
CITYWIDE NET
ABSORPTION (SF) -352,000 397,000
CITYWIDE AVERAGE
VACANCY 7.2% 7.0%
CITYWIDE AVERAGE
RENTAL RATE $14.60 $14.68
DELIVERIES (SF) 197,000 154,000
UNDER CONSTRUCTION
(SF) 561,000 585,000
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Houston’s Retail Market – 0.6M SF Under Construction
Houston’s retail market posted 397,000 SF of positive net absorption in the first quarter,
which is significantly less than the 1.1M SF posted in the previous quarter, but is a positive
gain from the -352,000 SF posted one year ago. Some of the tenants who opened new
locations during the first quarter include Sprouts Farmers Market, Main Event, Mattress
Firm, and Freddy’s Frozen Custard & Steakburgers.
Although 154,000 SF of new retail space delivered during the first quarter, Houston’s
retail vacancy rate decreased from 7.1% to 7.0% between quarters and from 7.2% over
the year. Currently, there is 585,000 SF in Houston’s retail construction pipeline. Some
of those projects include Whole Foods’ newest location in BLVD Place, Costco’s newest
location in Sugar Land’s Telfair, and the L.A. Fitness located at 4400 N Shepherd Drive
and W 43rd St.
The citywide average quoted rental rate for all property types increased from $14.34 to
$14.68 per square foot between quarters and from $14.60 one year ago. Houston retail
rental rates vary widely from $10.00 to $70.00 per square foot, depending on location
and property type and class.
The Houston metropolitan area added 118,700 jobs between February 2012 and February
2013, an astounding annual increase of 4.5% over the prior year’s job growth. Further,
Houston’s unemployment fell to 6.3% from 7.3% one year ago, which bolstered annual
Houston area home sales by 17.1%. With continued expansion in the energy industry and a
strong housing market, Houston’s economy is expected to remain healthy for both the
near and long-term.
ABSORPTION, NEW SUPPLY & VACANCY RATES
RESEARCH & FORECAST REPORT
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
UNEMPLOYMENT 2/12 2/13
Houston 7.3% 6.3%
Texas 7.2% 6.5%
U.S. 8.7% 8.1%
JOB GROWTH
ANNUAL
CHANGE
# OF JOBS
ADDED
Houston 4.5% 118.7K
Texas 3.3% 355.6K
U.S. 1.7% 2.2M
JOB GROWTH & UNEMPLOYMENT
(Not Seasonally Adjusted)

2. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON RETAIL MARKET
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Rental Rates
The citywide average quoted rental rate
increased from $14.34 to $14.68 per SF
NNN between quarters and increased
from $14.60 over the year.
Class A in-line retail rental rates vary
widely due to location and center type.
Recent quoted rates for unanchored
strip centers range from $20.00 -
$35.00 per SF (Class B and below can
rent for $12.00 to $20.00 per SF)
while power centers with three or
more strong anchors range from
$10.00 - $35.00 per SF. Lifestyle
centers and newly constructed strip
centers in Class A locations such as
High Street, Uptown Park and The
Vintage range from $40.00 - $70.00
per SF.
Vacancy & Availability
Houston’s retail vacancy decreased
from 7.1% to 7.0% in the first quarter.
By product type on a quarterly basis,
neighborhood and community centers
posted the largest vacancy rate
decreases from 10.9% to 10.6% and
from 6.5% to 6.3%, respectively. Strip
centers, theme/entertainment, single-
tenant, and mall vacancy rates
remained unchanged between quarters.
Power center vacancy rates saw the
largest increase between quarters from
4.7% to 5.4%.
Houston’s retail construction pipeline
contains 585,000 SF, of which
approximately 68% is pre-leased. First
quarter deliveries totaled 153,540 SF.
Absorption & Demand
Houston’s retail market posted 397,000
SF of positive net absorption in the first
quarter, much less than the 1.2M SF
posted in the previous quarter. The
opening of the Main Event in Stafford
as well as the opening of the new
Sprouts Farmers Market in the
Cypress/Spring area contributed over
83,000 SF to the first quarter’s positive
net absorption.
Other notable tenants that moved into
their space during the first quarter
include: Arhaus Furniture, Concentra
Health Services, Mattress Firm, Kinetic
Furniture, and Party Supply Store as
seen in the table to the right.
HOUSTON RETAIL MARKET STATISTICAL SUMMARY
Q1 2013 ABSORPTION
Tenant
SF
Occupied
Main Event 55,000
Sprouts Farmers Market 28,027
Arhaus Furniture 19,339
Concentra Health Services 10,054
Mattress Firm 7,500
Kinetic Furniture 5,000
Party Supply Store 4,800
Freeway Insurance 3,800
Best Friends Veterinary 3,750
Freddy’s Frozen Custard &
Steakburgers 3,077
Rentable
Area
Direct
Vacant SF
Direct
Vacancy
Rate
Sublet
Vacant SF
Sublet
Vacancy
Rate
Total Vacant
SF
Total
Vacancy
Rate
Q1 2013 Net
Absorption
Q4 2012 Net
Absorption
Class A Rental
Rates (in-line)*
Strip Centers (unanchored) 31,660,706 3,247,064 10.3% 14,888 0.0% 3,261,952 10.3% 17,913 34,865 $20.00-$35.00
Neighborhood Centers (one anchor) 68,661,126 7,111,141 10.4% 163,650 0.2% 7,274,791 10.6% 223,963 152,716 $20.00-$32.00
Community Centers (two anchors) 41,037,321 2,446,997 6.0% 113,311 0.3% 2,560,308 6.2% 111,506 128,330 $15.00-$30.00
Power Centers (3 or more anchors) 20,486,964 1,043,622 5.1% 71,190 0.3% 1,114,812 5.4% 2,657 113,299 $10.00-$35.00
Lifestyle Centers 4,022,334 266,852 6.6% - 0.0% 266,852 6.6% (8,899) 10,009 $40.00-$70.00
Outlet Centers 1,572,021 124,006 7.9% - 0.0% 124,006 7.9% (2,000) 351,115 N/A
Theme/Entertainment 653,840 224,804 34.4% - 0.0% 224,804 34.4% - - $25.00-$35.00
Single-Tenant 64,367,262 1,531,251 2.4% 33,660 0.1% 1,564,911 2.4% 39,524 341,406 N/A
Malls 29,481,876 1,756,850 6.0% 58,539 0.2% 1,815,389 6.2% 12,101 31,304 N/A
Greater Houston 261,943,450 17,752,587 6.8% 455,238 0.2% 18,207,825 7.0% 396,765 1,127,074

3. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON RETAIL MARKET
SALES ACTIVITY
Houston retail investment sales activity
increased between quarters. In the
first quarter 180 transactions were
recorded, with a total dollar volume of
approximately $3.2B, averaging $149
per SF with an average capitalization
rate of 8.13%.
Some of the more significant
transactions that closed during the first
quarter include:
Phillips Edison & Company purchased
the 148,963-SF Kleinwood Center from
Charter Hall Real Estate, Inc. in March
for $34.5M. The lifestyle center,
located in the Northwest submarket,
was 100% leased at the time of sale
and was purchased as an investment.
HEB and LA Fitness are the center’s
anchor tenants.
Fry Road Plaza, LLC purchased the
19,950-SF Fry Road Plaza, located in
the Far Katy North submarket, from
Texret, Inc. in March for $2M.
Fidelis Realty Partners purchased the
273,274-SF Willowchase Shopping
Center from Wheeler Real Estate
Investment Trust in March for $14M.
The community center, located in the
Fairfield submarket, was purchased as
an investment. Some of the center’s
major tenants include Fiesta Mart,
Tuesday Morning, Jo-Ann Fabrics, and
Mattress Firm.
LEASING ACTIVITY
Houston retail leasing activity for first
quarter 2013 totaled 943,426 SF,
compared to 841,061 SF one year ago.
Overall, transactions under 10,000 SF
comprised the largest group of retail
leases, with the market recording only
fourteen leases over 10,000 SF and
five over 20,000 SF in the first quarter.
A list of some of the leases signed
during the first quarter are listed in the
table below.
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RETAIL SALE TRANSACTIONS
Kleinwood Center
7306-7310 Louetta Rd, Spring, TX
Northwest Ret Submarket
RBA: 148,963 SF
Built: 2003
Buyer: Phillips Edison & Company
Seller: Charter Hall Real Estate, Inc.
Sale Date: March 21, 2013
Sales Price: $34.5M
Sales Price PSF: $232
Fry Road Plaza
3616 Fry Road, Katy, TX
Far Katy North Ret Submarket
RBA: 19,950 SF
Built: 2006
Buyer: Fry Road Plaza, LLC
Seller: Texret, Inc.
Sale Date: March 13, 2013
Sales Price: $2M
Sales Price PSF: $175
Building name/address Submarket SF Tenant Lease date
Sugar Creek Village SC Stafford Ret 40,324 Fiesta Mart Jan-13
Belt West Center Westchase Ret 30,687 Project Cure & Med Benevolence Feb-13
11120 N I-45 Near North Ret 25,000 SuitMart Feb-13
Northwood Village Center North Belt/Greenspoint Ret 10,054 Concentra Health Services Mar-13
Belt West Center Westchase Ret 8,520 Golf Warehouse Feb-13
17685 SH 249 Jersey Village Ret 7,500 Mattress Firm Jan-13
Cypress Plaza Fairfield Ret 5,000 Kinetic Furniture Feb-13
Rose-Rich Shopping Center Far Southwest Ret 4,800 Party Supply Store Jan-13
16606 Stuebner Airline Rd Far North Ret 4,137 Spring Auto Glass Feb-13
Mason One Plaza Far Katy South Ret 4,000 Las Tarascas Mar-13
Golden Plaza Near West Ret 3,800 Freeway Insurance Jan-13
Allendale Shopping Center Near Southeast Ret 3,600 Zumba Fitness Jan-13
Clear Lake Shopping Center NASA/Clear Lake Ret 3,500 Market Seafood Jan-13
Q1 2013 Top Retail Leases

4. RESEARCH & FORECAST REPORT | Q1 2013 | HOUSTON RETAIL MARKET
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4
LISA R. BRIDGES
Director of Market Research Houston
Direct +1 713 830 2125
Fax +1 713 830 2118
lisa.bridges@colliers.com