Houston industrial real estate market reports

Q3 2022

Houston’s industrial market significantly expands each quarter with 8.6 million square feet (msf) of new deliveries and preleasing almost 25% of the 24.5 msf under construction during third quarter. Population increases coupled with elevated shipping activity through the Port of Houston stimulate growth in both e-commerce and consumer products. Large retailers including Chewy are occupying more warehouses and distribution centers to provide consumers with the fastest product delivery. 

With record-level construction totals, developers are keeping pace with new projects in each submarket. The Southeast sector currently leads the list, with 7.5 msf or 30% of the total underway, due to the increased shipping activity at the Port of Houston. During the last 12 months, overall deliveries have totaled 19.8 msf, about 2 msf less than the average for under-construction projects, while leasing activity has soared to 43.2 msf and net absorption climbs to 28.1 msf during the same timeframe.
 

618 msf

Inventory

Houston industrial developers added 8.6 msf of new product to the market during the third quarter, doubling the last two prior quarters’ totals but still below year-over-year’s 11 msf.

5.2 msf

Net Absorption

Although the absorption pace slowed slightly, e-commerce and retailers such as Chewy moved into large new distribution centers during the third quarter.

$8.19

Direct Asking Rent

Asking rental rates have slowly risen each quarter during the last 18 months, increasing 11.9% year-over-year.

10.7%

Availabilities

Both direct and sublease availabilities escalated marginally during third quarter after trending downward during the last two years.

6%

Vacancy

Trending downward the last two years, vacancy also slightly increased from the previous quarter but is still an improvement from year-over-year’s 7.6%.

$109

Investment Sales

Recent sales are trending higher per square foot but will not match last year’s sale volume, which broke all records throughout the year.

Download the 2022 Q3 Houston Industrial Market Report

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