Q2 2023 Houston Industrial Market Report

Houston’s industrial market continues to outpace the city’s other real estate sectors, but the formerly white-hot market has somewhat cooled after back-to-back record-breaking years. Leasing activity remained strong overall with nearly 14 million square feet taken down through the first two quarters of 2023, however, this total is down roughly 28 percent over the same period from last year.


Absorption is slowing just as the city is expecting to see a record wave of new supply deliveries, over 70 percent of which is unleased. As expected, the vacancy rate hasrisen to 6.4 percent, a jump of 90 basis points since the end of the first quarter as easingdemand has not been able to keep pace with construction. Because of this, annual rent growth (4.2 percent) in the metro is under-performing the national average (8.5 percent)by more than 50 percent. Despite the challenges created by dampened rent growth, landlords have yet to be compelled to increase tenant concession packages.


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