Houston Mixed-Use Opens Amid Rising Vacancies

Even after the bottom fell out of the Texas real estate market last year, Houston's office market continued to thrive--until recently. Rising vacancies and more projects under construction make the completion of mixed-use projects, like the recently opened 425,000 square foot Citycentre look ill-timed. But, the property’s developer hopes to weather the difficult market.

The global economic downturn is putting pressure on tenants and causing them to hold off on any business decisions, which has resulted in space returning to the market, according to a recently released Houston office market report by Grubb & Ellis Co. Overall vacancy in the market jumped during the quarter to 14.7 percent--the highest level since the end of 2006, the report revealed.

Although retail leasing has slowed, the office, hotel, conference center, fitness, restaurants, theater, and residential uses all create tremendous traffic and activity, which helps retail leasing momentum, says Midway Cos., which developed Citycentre and is trying to fill it using new strategies. "Focus on Firsts" is an effort to bring new concepts in dining and entertainment to Houston. This pursuit of well-known international, local, and regional retailers that have not been impacted as significantly as national publicly-traded retailers is paying off, according to the company.