Q1 2024 Houston Industrial Market Report

Fueled by staggering population growth and robust activity at the port, Houston’s industrial market welcomed more than 35 million square feet of new supply last year. Coupled with a drawback in occupier demand from the peak seen coming out of the pandemic, the city’s vacancy rate has jumped to over 7 percent in early 2024, likely tied to the amount of new supply entering the market. This wave of available space has stunted rent growth. Registering at just over 3 percent over the past year, rent growth trails well behind the national average of 5.2 percent.

An additional 17 million square feet is remaining in the development pipeline, much of which is unleased. As a result, this could provide additional downward pressure on rental rates in the near term. Still, annual net absorption ranked among the highest in the country, helping landlords to not feel compelled to greatly increase tenant concession packages.

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