Q2 2026 Houston Industrial Market Report
Houston’s industrial market tightened in the second quarter after two straight quarters of rising vacancy. Total inventory across all industrial product types reached 726 million square feet at quarter’s end, a gain of 6.1 million square feet as deliveries picked up following a slower first quarter. Net absorption came in at a very strong 7.0 million square feet for the quarter, pushing year-to-date absorption to 11.3 million square feet and pulling total vacancy down to 7.4% from 7.6% in Q1. Leasing activity reached 11.1 million square feet, while the under-construction pipeline held roughly flat at 26 million square feet.
Demand stayed concentrated in logistics space tied to the Port of Houston, manufacturing, and data-center/AI-infrastructure-adjacent space. This was supported by over $9 billion in recently announced capital investment, including large pharmaceutical, defense, and advanced-manufacturing projects moving through the broader Houston MSA.
This quarter’s largest deal was a 1.03 million-square-foot user purchase at 12515 Lockwood Rd in the Northeast, signed in late April by a data center-related tenant. In the Southwest, Applied Optoelectronics expanded footprint by nearly 800,000 square feet across three separate leases, adding to its previously announced purchase of Kirby District. TAS Energy also had a busy quarter, with three new leases totaling 750,000 square feet at Carson 288.
Asking rents moved up across nearly every submarket this quarter. Free rent and TI packages, which had been widening as concessions to fill new speculative supply, are starting to hold flat or tighten on the most in-demand buildings, even as they continue to loosen on slower-moving product elsewhere. Large users tied to AI infrastructure, power generation, and reshored manufacturing are moving quickly and competing directly for space above 200,000 square feet. Economic and interest-rate uncertainty continues to weigh more on mid-size and speculative decisions than on the large-format, mission-critical requirements driving this cycle.