Houston industrial market report
Q2 2024
The Houston industrial market remains robust, adapting to evolving consumer demands while maintaining strong fundamentals. While demand for industrial space has normalized after a period of exceptional growth, leading to a slowdown in new construction activity starting in Q1 2024, healthy industrial-using job growth and sustained activity at the Port of Houston indicate a resilient market. This strength is driven by a diversified tenant base that extends beyond just e-commerce, including logistics, distribution, and parcel delivery companies alongside wholesalers and industrial equipment machinery businesses. This diversification positions the Houston industrial market for continued future growth.
7.3 msf
Net absorption remains strong
Occupier demand has moderated from record highs, but Houston industrial market absorbed over 7.3 msf in the first half of 2024, exceeding pre-pandemic levels.
8.0%
Vacancy rate ticks up with new supply
The vacancy rate has edged up due to nearly 6.0 msf of new deliveries in Q2 2024, with much of this new inventory and new deliveries from 2023 still in the lease-up phase. However, the vacancy rate remains below the most recent peak of 8.6% recorded in early 2020.
11.5 msf
Construction activity continues to slowdown
Developers are taking a pause amid slowing leasing activity and a challenging financing environment, causing the construction pipeline to decline to its lowest level since 2017.
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