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Market Report

Houston Industrial

Second Half 2019

Construction Continues to Outpace Other Port Markets; Private Buyers Finding Numerous Opportunities

 
 

Developers stay focused on select pockets. Increased activity at the Port of Houston is supporting the metro’s already-strong industrial sector and helping push construction volume to its highest mark in more than a decade. During the past five years, Houston’s inventory growth exceeded 10 percent, in line with the nation’s most prominent hub markets like Atlanta, Dallas/Fort Worth and the Inland Empire. Relative to other port markets, Houston has witnessed more rapid inventory expansion — a trend that will likely be sustained into the near future amid greater port activity and exceptional population growth across many areas of Texas. With 12.3 million square feet of industrial space already completed in 2019, developers have put a heavy emphasis on several areas of the metro including La Porte, Pasadena, northern suburbs adjacent to I-45 and the Highway 290 corridor. Vacancy in these areas has resultantly risen in recent months, supporting a substantial boost to the marketwide rate, driving the reading to 6.5 percent at the end of the third quarter. With the metro still attempting to reach equilibrium after receiving 61 million square feet since the start of 2015, vacancy will remain relatively elevated for the foreseeable future despite solid demand drivers.

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