Houston, TX — Houston’s construction pipeline continues its upward journey as developers fulfill the demands of e-commerce suppliers and business at Port Houston. The under-construction total jumped to 15.5 million square feet (msf) during the first quarter. The 80 buildings underway primarily represent warehouse or distribution facilities. Industrial property deliveries increased from both the previous quarter and the same quarter in 2018.
These are the key trends noted in Avison Young’s First Quarter 2019 Houston Industrial Market Report, released today.
“Port Houston remains the driving force of the robust industrial market, as the Southeast sector shows no slowdown, recording the highest net absorption and largest square footage under construction of all submarkets during the first quarter,” comments Rand Stephens, Avison Young Principal and Managing Director of the company’s Houston office.
The bulk of projects under construction is concentrated in the North and Southeast submarkets, with the two combined submarkets representing 11 msf, or 70% of the total. About 30% of first-quarter 2019’s new space was preleased, accounting for almost 1.4 msf of positive absorption but also resulting in an additional 2 msf of vacant space being added to the market.
According to the report, Port Houston and expanding consumer goods continue to stimulate the ongoing eight-year positive absorption trend, despite recent slowed activity.
“Costs for industrial product have risen sharply,” comments Avison Young Principal, Bob Berry. “Higher land prices have led to increased industrial costs, combined with undisciplined ad valorem taxes.”
Home Depot’s 770,640-square-foot lease at the future Hines development, Grand National Business Park, in Northwest Houston is the largest deal signed in 2019 to-date.