Q4 2023: Houston Industrial Market Report

Houston’s industrial market thrives on rapid population growth, a bustling port, and robust activities in manufacturing and petrochemical industries, consistently outperforming other sectors in the nation. Houston has proven resilient in navigating the economic uncertainty gripping many other major US markets, boasting one of the highest trailing 12-month net absorption rates in the nation despite a decrease in leasing volume over the past two years.

Even with healthy demand, a wave of new supply has pushed the vacancy rate higher. Houston welcomed a record-high 35 million square feet of inventory in 2023 and currently has an additional 21 million square feet under construction, the majority of which is unleased. As this space comes online, expect the vacancy rate to inch upward well into 2024 but may be curbed late in the year and moving into 2025 as construction starts have slowed, thanks in part to tightening lending standards. Even with a glut of available space, rent growth has proven strong, experiencing a five percent jump last year – the largest one-year increase since 2000.