In Houston, the industrial sector did well in 2012 – and will continue to do well in 2013 – thanks to two factors: energy and jobs. “The main economic driver here is the energy industry and co-related dependents,” comments Stream Realty associate Michael Flowers. “That will continue to flourish, and will continue to fuel growth in multiple arenas, whether directly or from suppliers.” Though the majority of the activity is taking place in a handful of sectors, much of the region is showing single-digit vacancies.

As a result, there is competition over the space that comes to market. “Deals are getting done a lot faster,” observes Stream Realty associate Jeremy Lumbreras. “Deals that would normally take three to four months to complete are now being done in 30 to 45 days. There's so much competition on the market for quality space, it's flying off the shelves.”

The experts acknowledge that, based on the statistics, it's somewhat surprising developers haven't descended on Houston to build, especially given the lack of zoning laws. There are many projects going north, especially on the far west side, and in the north and northwest submarkets. But Rusty Tamlyn, senior managing director with HFF points out that, even with space scheduled to come online, the area is still short. “We have some 3.5 million square feet under development,” he comments. “We've had five million square feet of absorption in the past year. Space that is being built is being leased quickly.”

The experts believe there will more development in 2013, though it's questionable whether it'll be speculative, build-to-suit or projects that are substantially preleased.

The Dallas-Fort Worth area has seen a surge in industrial leasing and activity—but the bulk of that has taken place among smaller users. “What you saw happen this past year was that leasing activity started jumping out in spaces under 100,000 square feet,” comments Josh McArtor, senior vice president with CBRE.

Adds Colliers International executive vice president Allen Gump: “We became similar to a lot of markets in that, within a year, we transitioned from a spec product market to a build-to-suit market.” The main reason for the focus on build-to suit, he goes on to say, is rental rates. “Those rates haven't justified a lot of spec construction, but they're finally getting back to a point where you can justify it,” Gump comments.

Though smaller users were busy taking down space through leases, it was the larger users that decided to build their own. Amazon.com is planning a 1.1-million-square-foot center in Coppell, Restoration Hardware has selected Grand Prairie for an 850,000-square-foot distribution center and the Home Depot is well under way with its South Dallas distribution center.

This has led to an industrial sector that is, for the time being, in equilibrium. “It's fairly healthy here,” observes Cliff Booth, president of Westmount Realty Capital. “We have the drivers that are positive for growth: rail service, geographic location and the fact we're a major distribution hub today.”

Experts believe more speculative space will be in the works during 2013. “The construction activity we're seeing these days is incredibly disciplined compared to 2006-2007,” McArtor says.

In 2010 and 2011, the big news in the Phoenix industrial sector was the big-box users and builders; the ones that came in and took down anywhere from one million to two million square feet of space. But the story was vastly different in 2012—and likely will remain the same in 2013. “We finished the year with a positive net absorption of 7.4 million square feet and our vacancy went down to just under 11%,” comments Pat Feeney, senior vice president with CBRE. “The interesting aspect about this absorption is that it consisted of spaces between 20,000 square feet and 200,000 square feet.”

Lee & Associates' principal T.J. Swearengin sees the same thing on the sales side. “I sold a lot of smaller buildings in 2012: between 5,000 square feet and 20,000 square feet,” he explains.

Feeney believes that 2012's absorption figures were healthier than those posted in 2011. “It means we're not dependent on Amazon coming in and taking two buildings measuring 1.2 million square feet each,” he comments. “I'd rather do 10 deals at 200,000 square feet or even 20 deals at 100,000 square feet. It shows more businesses making commitments.” Feeney was also cheered by the diversity of businesses taking space. “We saw manufacturers, third-party logistic providers, pharmaceuticals and food companies, as well as ecommerce.”

Both experts don't see any major surprises cropping up in 2013—just more slow and steady growth. Feeney anticipates that net absorption could hit 7.5 million, with a few spec buildings coming out of the ground.