The retail market in Houston appears to be well positioned for a possible economic recession. Leasing activity is strong, and landlords are raising rents in strong, high-demand market areas. Consumer demand has been notably high for home improvement, drive-thru, discount, pharmacy, and beauty concepts. Similarly, the largest move-ins over the next couple quarters will be grocery stores. This high demand allows developers to continue to bet on Houston's eagerness for new retail development.
Houston continues to be a thoroughbred in the industrial real estate market as we enter 2023, driven by 5.6 million square feet of new deliveries during 4Q22. Occupier demand has increased with population on the rise and the need to ship products in and out of the Houston Port. We are expecting around 55 million SF of industrial space to be completed between 2022 and 2023.
The office market has dealt with a fair number of shortcomings taking the wind out of its sails and causing real questions as to what changes the office market will experience in 2023. Office is still struggling to regain its momentum following the pandemic while facing an uncertain economy. In 4Q22 the square footage of space absorbed was 925,120 leaving the vacancy rate to 22.6% or 80 million square feet of space. Asking rents in Houston increased by 0.7% in 2022, which was under performing the U.S. average of 1.2% as of 4Q22. Rent gains are projected to increase somewhat during 2023; around 1.9%.