July 6, 2016
Industrial market remains steady through mid-year
The Houston industrial market maintained solid fundamentals in the second quarter of 2016 despite notable headwinds in the overall Houston economy.
Although some companies are postponing expansion until things in Houston improve overall, consumer goods – driven by population growth and high retail demand – has compelled leasing activity in the city’s industrial market. While a few big-box leases have dominated headlines, the vast majority of industrial leases in the second quarter were significantly smaller in size. Eighty-four percent of industrial deals in the second quarter of this year were less than 100,000 square feet.
The industrial market’s resilient demand has kept supply tight across the city. Even with 1.6 million square feet of industrial space delivered in the second quarter, total vacancy remained unchanged at 5.5 percent. This speaks to the high demand for the metro area’s industrial sector as companies make long-term commitments to Houston.
Industrial development remained high during the second quarter, especially in two of the city’s strongest submarkets: the southeast and northwest. Most projects in the southeast are speculative but are leasing up relatively fast due to proximity to the Port. On the other side of town, the development pipeline in the northwest is largely characterized by owner-users. Given the area’s strong distribution channels, the Houston warehouse market should continue to prosper in the period ahead, especially if development activity remains disciplined in weaker submarkets.
Click on the links below to view the full Houston industrial report and statistics for Q2 2016.