The retail commercial real estate market across Texas remains resilient amid macroeconomic uncertainty with cities like Austin, Dallas, McAllen and Houston each showcasing distinct growth patterns and investor opportunities. Experts from across the state offered REDnews key insights into Texas’ evolving retail landscape, reflecting both optimism and strategic adaptation.
‘Very bullish’ on Austin
In Austin, strong demand and limited supply continue to define the retail market, with personal services, restaurants and junior anchors leading the charge. The challenge, experts say, lies in finding enough space to meet tenant needs.
“We are currently at a sub-4% vacancy rate in the market with a lot of good activity,” said Kheili Hiller, senior associate at Cushman & Wakefield. “A number of national retailers are looking at options to enter the Austin market or expand their existing footprint.”
Developers have slowed new construction, raising concerns that demand could outpace supply.
“I think most people have a ‘wait and see’ attitude right now given the economic uncertainty,” Hiller said. “I tend to be very bullish on Austin and think we will continue to see strong demand, which is great, but that demand can only sustain itself if there is product in which to put tenants. With developers putting the brakes on new projects, I worry that supply will become so limited that it becomes difficult to get deals done.”
Adam Zimel, principal at Endeavor Real Estate Group, echoed the sentiment.
“Absorption matching deliveries is a result of strong demand,” Zimel said. “Said otherwise, most all retail product being delivered is leasing because the Austin MSA is undersupplied.”
Tenants range from chef-driven restaurants and quick-service operators to junior anchors.
“Personal services and restaurants continue to be most active in the pad and small shop product type,” Zimel said. “In terms of the junior anchors, they are as active as I have seen in the last 10 years. It doesn’t always translate to deals but they need store counts and performance has generally been good within the market.”
Austin’s cultural reputation adds to its appeal.
“One driver is that Austin is a cool place to be. If you are a young, cool brand, you want to be here,” Hiller said. “We are also maturing enough as a city that the more established, super high-end retailers want to be here, too.”
She added that local support for independents fosters growth.
“We have so many amazing local retailers and a population who really gets behind local concepts,” she said. “It makes these retailers able to exist and grow.”
Retailers are also adapting to new consumer habits.
“Retailers want customers to feel like they have been transported somewhere when they enter their space,” Hiller said. “The customer base seems to have moved away from wanting to see every option possible in front of them to preferring a smaller amount of well-curated items.”
Zimel noted changes in tenant pairings.
“The shift in active anchors has aligned some that once were not co-tenants,” he said. “We are working a few deals at projects with both grocery and fitness as they see overlap in customer profiles with both being health oriented. They have aligned to co-tenant at projects where they once wanted separation between them.”
Dallas retail ‘thriving’
In Dallas-Fort Worth, strong demographics continue to drive momentum, especially in the northern suburbs.
“The North Texas submarket is thriving,” said Jamie Cox, senior vice president of property operations at Trademark Property Company. “Strong market fundamentals, such as population growth and a business-friendly environment, are fueling tenant demand and contributing to healthy, stable leasing trends.”
While the region posted its first quarter of negative absorption since 2020, experts say it’s not a sign of weakening demand.
“Recent negative absorption was almost entirely related to the closings of big-box spaces such as JoAnn, Party City and Big Lots,” said Michael Wheat, managing director and North Texas retail lead at JLL. “Despite this negative absorption, DFW continues to be one of the strongest retail markets in the country and activity has not slowed down. While the closings put large blocks of space on the market, the majority of it has been leased or is in the process of being leased.”
“The sector is facing new challenges that retailers and owner/operators will need to learn to navigate, but this likely won’t have a long-term impact,” Cox echoed.
Leasing activity remains healthy.
“The tenants we’re seeing are most active in the market include grocery, health and wellness, beauty services and restaurants,” Wheat said. “Rapid population and economic growth in DFW and the health-conscious trend that’s continuing to gain popularity are just a few of the motivating factors behind these categories of retail expansion.”
Cox pointed to Galleria Dallas as a sign of momentum.
“We recently welcomed the first H&M Home in the state of Texas, the first UNIQLO store in North Texas and one of only two locations in the country for Netflix’s upcoming experiential entertainment destination, Netflix House,” Cox said.
Experiential and fitness tenants are also driving foot traffic. Cox said. “People’s growing desire to gather with friends and family has reinforced demand for experiences at retail destinations, and these tenants have become a top target for landlords.”
“[Experiential and fitness] users serve as fantastic cotenants and attract significant foot traffic, provided sufficient parking is available,” Wheat said.
New development continues in family-driven suburbs.
“The majority of new retail development in the northern suburbs of DFW is associated with grocery anchored centers, due to the needs of family-oriented areas like Frisco, Prosper, Celina and beyond,” Wheat said.
‘Wait-and-see’ approach for Houston developers
Houston’s retail market held steady in early 2025, showing resilience despite softening fundamentals and broader economic uncertainty. According to Colliers most recent market report, vacancy rose slightly to 5.5%, up just 10 basis points from the previous quarter. Net absorption dropped to 153,538 square feet, down more than 60% quarter over quarter.
Even with the slowdown, leasing activity remained notable at 1.7 million square feet, driven by major retailers including Chipotle, Target, HEB and Walmart. The average asking lease rate climbed to $20.69 per square foot, reflecting modest gains both quarterly and year over year.
Construction activity also cooled. Deliveries dropped to 530,189 square feet, a 50% decline from the same period last year, and the development pipeline shrank by more than 1 million square feet year over year. Still, large-scale projects like a new 120,256-square-foot HEB in west Houston broke ground, reinforcing long-term confidence in the market.
Colliers analysts described the mood as “wait-and-see,” as retailers adjust to trade tariffs, rising costs and shifting consumer behaviors. Despite these pressures, the report noted that Houston continues to outperform many peer markets, supported by its affordability, population growth and a solid pipeline of future development.
RGV emerges as a “retail powerhouse”
In the Rio Grande Valley, the retail sector is booming. McAllen recorded $96.8 million in sales tax remitted in 2024, ranking first in the region, 15th in Texas and second in per capita retail sales among Texas cities over 100,000.
“Coupling economic vibrancy, high safety, affordability and strong cross-border tourism makes the RGV a retail powerhouse,” said Rebecca M. Olaguibel, director of retail and business development for the City of McAllen.
Retailers are diversifying to meet the needs of a growing and bilingual population.
“Retailers are widening their range: from value-driven big-box stores (Ross, Dollar Tree) to upscale soft goods (Lululemon, H&M, Zara) to specialty dining and entertainment,” Olaguibel said.
Cross-border customers fuel demand for discount and electronics, while domestic migrants drive growth in home and lifestyle retail.
Development is booming in Central and North McAllen.
“Factors like new residential construction and high volume of consumer traffic offer the perfect setting for success,” Olaguibel said. “Both big-box retailers and discount stores are thriving, often ranking among the best-performing stores nationally. High-performing national players include big-box discount (Burlington, Ross, Hobby Lobby, Five Below, dd’s), soft goods anchors (H&M, Zara, Mango, Lululemon), electronics and value chains (Dollar General).”
Mixed-use development and logistics are expected to gain momentum.
“McAllen and the Rio Grande Valley’s continued population growth and economic diversification present ample opportunities for developers,” Olaguibel said. “Mixed-use developments that combine retail, residential, and recreational spaces are poised for success. Additionally, the region’s strategic position in international trade corridors makes it ideal for logistics and other international ventures.”
Challenges remain, but leaders are responding with investment and collaboration.
“As a rapidly growing region, we see these as opportunities,” Olaguibel said. “Through strong collaboration with local, state and federal partners, we are actively investing in and upgrading infrastructure to support sustainable retail growth. It’s a dynamic time — pardon our progress as we build for the future!”
Across every region, the message is consistent: Texas continues to lead the nation in retail real estate, backed by demographic strength, investor confidence and a sector willing to evolve.
