HOUSTON—Houston's population has grown 12.4% in the last five years and 27.2% in the last decade. This equates to nearly 6.7 million people in the 10-county area. This influx of new residents to the region brings with it an inherent need for more distribution space and a supply chain that can effectively serve the population, according to JLL's industrial services brokerage group.

“As the Houston population has grown, retail, and food and beverage would naturally follow,” Richard Quarles, senior vice president of JLL's industrial services brokerage group, tells GlobeSt.com. “In the Northwest submarket, consumer durables, and food and beverage are following the population growth and expansion of residential areas.”

Specifically, there have been more than 6.7 million square feet of leases signed in the retail distribution and consumer goods sectors. This includes industries such as food/beverage and residential building supplies companies such as Serta and Michelin, which are opening new distribution centers across the metro.

Some of these tenants have chosen to be near the Port of Houston or Bush Intercontinental Airport, while others have found opportunities along major transportation corridors such as Beltway 8 or the expanding Grand Parkway. While deal activity has not been focused on a specific part of the metro, high-demand submarkets such as the Northwest and Southeast have captured the greatest share at 38.1% and 21.3%, respectively, says JLL. The advantages of Houston's hub-and-spoke highway system are wide-ranging, optimizing distribution channels from locations across the metro for these companies

“The Northwest submarket encompasses major thoroughfares in Houston like Interstate 10, US 290, large portions of the Grand Parkway, etc.,” Quarles continues. “From a distribution standpoint, this transportation infrastructure gives the Northwest submarket excellent connectivity to major population centers outside of Houston.”

Looking ahead, retail distribution and consumer goods will likely continue to be a major driver of leasing activity for Houston's industrial market in 2017 and beyond. Currently, of the 9.7 million square feet of active tenant requirements in the metro, 47.5% fall into this consumer-facing cohort. With e-commerce continually expanding, Houston could begin evolving into more of a big-box market, as access to multimodal shipping, ports and distribution networks provides a strong backbone for large industrial users. With major online retailers making long-term commitments across Houston, it follows suit that similar companies will seek to grow footprints in the fourth most populous US metro.

Instant Insights /

Houston May Evolve into More of a Big-Box Market

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