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Market Report

Houston Industrial Investment Forecast

2019 Outlook

Houston’s Growing Economy Diversifies Space Demand; Assets North of Metro Attract Private Investors

 

Rapidly expanding economy driving industrial market. Companies are leasing new distribution and logistics space across the metro as employment and population growth support consumer demand. Developers have responded to elevated absorption by maintaining heightened construction levels, though supply growth is below the cyclical peak in 2015. Many of the metro’s largest projects are build-to-suit facilities along Interstate 10 and Northwest Houston. The energy sector, meanwhile, utilizes a significant share of the metro’s industrial space, though new demand from energy companies is not expected this year. Oil prices have largely flattened and fluctuations are met with pressure both internally and externally. The number of operating rotary rigs in the U.S. has hovered slightly above 1,000 for the past year, providing little motivation to increase current footprints. Even without a growing energy sector, supply will meet demand in 2019, facilitating healthy rent gains.

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