Texas Retail Market Holds Strong Amid High Interest Rates

Low Vacancy Across Major Metros

• Austin (3.4%), Dallas–Fort Worth (5.1%), San Antonio (4.1%), and Houston (5.5%) all remain well below 20-year vacancy averages.

• Demand is driven by fitness, furniture, specialty retail, and fast-casual dining tenants.

• DFW leads the nation in retail absorption—over 3M sq ft net absorbed—with two-thirds of new leases under 5,000 sq ft.

High Rates, Limited Supply, Strong Landlords

• Elevated interest rates are slowing new construction, tightening supply and boosting demand for existing spaces.

• Landlords hold pricing power and are securing pre-leases before project completion.

• Owners with floating-rate debt may face refinancing challenges, but leasing activity remains robust.

Market Snapshots

• DFW: Rents around $24.60/sq ft, 4.5% YoY growth, 7M+ sq ft under development.

• Austin: Class A small-tenant retail fetching $35–$60/sq ft in prime areas.

• San Antonio: 5% YoY rent growth to $19.90/sq ft; gyms and entertainment filling large spaces.

• Houston: Retail stable at 5.5% vacancy; strong expansions like Marshalls/Sierra pushing centers to near full occupancy.

TakeawayTexas retail is thriving despite financing headwinds. Low vacancy, strong tenant demand, and limited supply continue to favor landlords, especially in prime and mixed-use locations.