Houston industrial market report
Q1 2024
The Houston industrial market remains robust even as it adapts to evolving consumer demands and its fundamentals remain strong. While the broader economy cools, demand for industrial space has normalized after a period of exceptional growth. This has led to a slowdown in new construction activity starting in Q1 2024. However, healthy industrial employment growth figures and sustained activity at the Port of Houston indicate a healthy market. Notably, 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 growth in the future.
3.2 msf
Net absorption remains robust
The Houston industrial market thrived in Q1 2024, absorbing over 3.2 msf despite moderating demand that remains above pre-pandemic levels.
7.6%
Vacancy rate ticks up with new supply
The vacancy rate has edged up due to 5.6 msf of new deliveries in Q1 2024, with much of the 2023 new inventory still in lease-up. However, it remains below the most recent peak of 8.6% recorded in early 2020.
13.7 msf
Construction activity continues to slowdown
Developers are taking a pause as demand cools, with construction starts falling to their lowest level since 2016.
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