Houston developers build record-breaking 32.4 msf of new industrial product in 2023

2023 industrial deliveries by building size

Houston's industrial sector experienced explosive growth, with 32.4 million square feet (msf) of new space constructed in 2023. Driven by the e-commerce boom, strong population growth and large occupiers entering the market, big box development over 500k sf accounted for 42% of the new product delivered in 2023.  Big box development has significantly expanded by 8.7 msf from 2016 to 2019 and reached a peak in 2022 with an increase of 16.1 msf from 2016. Vacancy rates in these big boxes have also risen by 17.4% year-over-year, largely due to the record amount of new supply outpacing demand.  While nearly half of the big box developments are pre-leased, some large companies are downsizing. For example, Safavieh, a high-end furniture manufacturer, originally planned to occupy 1.0 msf at the AmeriPort Industrial Park but has since reduced that to half the space. Wayfair also stopped plans to open a 1.2 msf distribution center at Prologis Presidents Park and is looking to sublease the space instead. The trend of rising vacancy rates in big boxes suggests that there could be a temporary oversupply situation, especially as demand has slowed to pre-pandemic levels. However, smaller industrial spaces remain in higher demand and could eventually face a shortage of new spaces beyond 2024.

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