Despite the concerns surrounding COVID-19, Houston retail had a relatively strong quarter with 843,709 sq. ft. of positive absorption and just under 1 million sq. ft. of retail product delivered. The Far North and Far West were the most active submarkets, accounting for 70% of total absorption in Q1 2020.
With many retailers forced to close their doors, a lot of uncertainty remains on how the virus will affect both small businesses and national retailers. Most small businesses have seen revenue decline anywhere from 15% to 80%, while large national retailers, including Macy’s and Gap, are furloughing a majority of their employees.
The growing amount of COVID-19 cases in Texas, as well as an oil price crash, have caused the state’s economy to slow down in Q1 2020. After seeing a low unemployment rate of 3.5% in January, Comptroller Glenn Haggar stated that this metric is on track to double as the virus continues to spread, but the unique nature of this downturn should result in an unusually swift recovery that could begin as early as Q3 2020.
Assuming the coronavirus peaks this summer in the U.S.—mirroring China’s experience—the U.S. government’s fiscal and monetary stimulus will begin to bear fruit. This will be paired with pent-up private demand that could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.