Santa has his workshop and delivers his presents down the chimney.

Online retailers just send stuff by UPS or FedEx.

But there’s still a lot of holiday retailing that takes place in regular old stores, malls and neighborhood shopping centers.

As the Christmas shopping season is on us once again, it’s time to assess the health Houston’s retail centers. How are the shopping center developers and landlords who develop and lease space for stores and restaurants? In a word: Good.

“Thank God we’re in Houston. And thank God we’re in Texas. Texas, in general, is performing much better that the rest of the country,” said shopping center expert Lance Gilliam of UCR moodyrambin Page.

More than 500,000 square feet of empty retail space has been leased up in the Houston area so far this year, according to the CB Richard Ellis commercial real estate firm. That’s a sharp improvement over the last three years when more retail space was going vacant than was being filled — a nasty trend the experts call “negative absorption."

In 2009 alone, two million square feet of Houston was vacated, CB Richard Ellis reported. That’s about like having First Colony Mall and Baybrook Mall both going vacant in one year. So 2009 was awful for the shopping center business and things have been improving since then.

The improvement in retail is centered around job growth. Houston is one of the top markets in the nation for job creation. Over the last 12 months, the Houston area has added 80,000 new jobs. It’s a positive sign that grabs the attention of retailers and restaurants that want to expand.

All the apartment construction in the Inner Loop area has prompted a lot of retail leasing in places like The Heights, where there are loads of new restaurants. New grocery stores are opening. HEB just opened its new Montrose Market store at West Alabama and Dunlavy and Whole Foods opened this summer off of Waugh Drive.

In the suburbs, retailers are taking new positions in or near the prime master planned communities like The Woodlands, Cinco Ranch, Telfair, Bridgeland or Sienna Plantation — the communities that have the most housing starts.

Overall, the vacancies in Houston area shopping centers are being reduced and rental rates for shopping center space have remained fairly firm. The overall vacancy rate in the third quarter was 8.2 percent, a major improvement over 2009 when shopping center vacancy approached 15 percent.

Construction is still relatively light. The Marcus & Millichap realty firm is predicting that less than 500,000 square feet of new retail space will be completed in 2011, following the 400,000 square feet that came online in 2010. It’s a fraction of what was built in the strong years of 2007 and 2008 when more than five million feet square feet were built annually.

The slowdown in construction has allowed the retail center market to regain equilibrium and digest the glut. Tighter lending practices have restrained pace of new development, Marcus & Millichap reports.

So when you walk into the local shop to do your holiday shopping this December, enjoy the glow of happiness from the owner of the shopping center, who is happier in 2011 than in 2010.

Christmas Sales Flash Report

Although the Christmas shopping season has just begun, it appears to have started with a relative bang, said Ed James, a shopping center broker with UCR moodyrambin Page.

James said retail sales in Houston during Black Friday weekend were up about six percent over last year.

"Sales have been really good compared to the last couple of years,” James said. "People are spending money again.”

Retailers discounted heavily to draw traffic and the customers responded. But it remains to be seen if the strong sales can be sustained throughout the Christmas shopping season, James said. Sales at high-end retailers appear to be very good, he said.

Big Move

Another big shift in the local shopping center industry was announced recently — the merger of Page Partners into UCR moodyrambin. The shopping center brokerage firm has been renamed UCR moodyrambin Page.

Page Partners’ namesake, Ed Page, is a 30-year veteran in leasing retail space in Houston. He has represented stores such as Target, Crate & Barrel and Borders Books. A number of brokers from Page Partners are now working under the UCR moodyrambin Page umbrella.

Nick Hernandez, formerly a principal at Page Partners, and several other Page Partners brokers went to the retail division of the Transwestern realty firm in October.

Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of RealtyNewsReport.