Houston Industrial Real Estate Market Reports | Avison Young US - Houston

Houston industrial real estate market reports

Q4 2022

Houston’s industrial market continues to significantly expand with 5.4 million square feet (msf) of new deliveries during the fourth quarter driven by strong occupier demand. Developers have expanded their product offerings with record-level construction totaling 31.3 msf underway currently 16% preleased. Population increases coupled with elevated shipping activity through the Port of Houston have stimulated growth in both e-commerce and consumer products. Many large retailers and third-party logistics (3PL) companies continue to proceed with growth plans to support robust consumer growth despite lingering global economic uncertainty.

With record-level construction totals, developers are keeping pace with strong demand in each submarket. The Southeast sector currently leads all submarkets, with 7.4 msf or 24% of the market-wide construction total underway, due to the increased shipping activity at the Port of Houston. During the last 12 months, construction deliveries have totaled 23.4 msf, while leasing activity has soared to 46.0 msf and net absorption has climbed to 28.0 msf during the same timeframe.

4.9 msf

Net absorption

The net absorption pace slowed slightly during the quarter but ended the year with 28 msf absorbed as many large retailers and 3PL companies have accounted for the bulk of the growth moving into large new distribution centers.

$8.33

Direct asking rent

Rental rates have climbed by 12.9% year-over-year, driven by elevated demand and the delivery of new product.

10.6%

Availabilities

Both direct and sublease availabilities escalated marginally during the second half of 2022 after trending downward over the last two years.

5.8%

Vacancy

The market-wide vacancy rate has trended downward over the last two years driven by strong demand outpacing construction deliveries but remained unchanged during the fourth quarter.

23.4 msf

Construction

Houston industrial developers added 5.4 msf of new product to the market during the fourth quarter, bringing the yearly total to 23.4 msf, but there remains over 30 msf of new product in the pipeline scheduled for delivery in 2023.

$107

Investment Sales

Industrial property sales price per square foot continued its upward climb to an all-time high but sales activity ended the year slightly below the prior year’s record level.

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