Healthy industrial demand spurs new development across Houston

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Jan. 3, 2018

By: Jeff Venghaus, executive vice president and industrial lead, JLL Houston

industrial users

Sustained demand from industrial users is spurring new developments across Houston, and they are bigger than ever.

Five new buildings broke ground in the fourth quarter of 2017, and 4.6 million square feet of industrial space is currently under construction. The increase in big-box groundbreakings at year-end helped reverse a six quarter decline in construction volume.

Current vacancy and availability of large blocks of existing space are limited. As a result, large users are having to start the site selection process with land searches and a quality understanding of new development locations and opportunities.

Consumer goods and logistics companies continue to drive much of the demand for Houston industrial product. Companies in these categories accounted for close to half of the 3.4 million square feet of leasing activity at year-end, with tenants signing long-term deals and expanding footprints across the metro.

Changes in supply chain logistics are continuing to put Houston on the radar for regional distribution facilities and fulfillment centers, leading to larger space requirements from tenants. A total of 12 big-box warehouse/distribution projects either delivered, or were in progress during 2017 a 20 percent increase year-over-year and a 140 percent increase from 2015.

In total, Houston’s industrial market saw approximately 7.3 million square feet of space deliver in 2017 and recorded positive net absorption of 7.6 million square feet for the year. The industrial sector closed 2017 with a market-wide vacancy rate of just 4.9 percent.

As tenants remain confident and developers disciplined, the Houston industrial market is poised for another successful year.

Get our full Q4 2017 industrial market report here.

About the Author

Jeff Venghaus is an Executive Vice President at JLL, where he serves as the leader of JLL Houston’s Industrial Services group. With more than 17 years of experience, Jeff specializes in industrial end-user representation including acquisitions, dispositions, leases, build-to-suit and design-build projects. He has been named a Houston Business Journal Heavy Hitter on seven occasions and was previously named the 2010 Industrial Broker of the Year and 2004 Industrial Rising Star by NAIOP. Connect with Jeff on LinkedIn

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