Almost everything is heading in the right direction in Houston's industrial sector, led by vacancy, which dropped by 60 basis points from the previous 12 months to 7.1 percent in the second quarter, a Savills market report shows. The South and Northwest submarkets commanded the lowest rates, at 4.9 percent and 5.3 percent, respectively.
Another notable improvement was rents, which soared by 4.9 percent to $0.64 per square foot on a monthly basis.
That came all came as construction, while up year-over-year, stagnated in the second quarter compared with the previous three months. Also, deliveries slipped by 7.1 million square feet to 6.6 million square feet year-over-year in the six months through June.
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Also, another important factor was that net absorption remained positive at 5.9 million square feet in the year-to-date through June, although that's 2.8 million square feet less than what was posted in the same period 12 months ago.
When it comes to leasing, the category "held firm," according to Savills, with more than seven million square feet of signings in the second quarter. Over half of which occurred in the Northwest and Southwest submarkets.
This includes " Foxconn leasing 417,000 square feet (sf) in the Northwest submarket and JW Fulfillment Inc. leasing 353,000 SF in the Southwest submarket, said Savills.
The CRE firm going forward expects the net absorption in Houston's industrial sector to remain "positive" and "likely firm." Assuming demand outpaces deliveries, it forecasts that vacancy will remain steady.
"Given the amount of leasing observed, it is likely net absorption will remain positive in the near term, potentially increasing in the second half of this year," Savills predicted.
"Houston’s strong population growth and business-friendly environment will likely continue to attract occupiers to the region," Savills said.
Some major new industrial developments to look out for in Houston include Grainger's 1.28 million square foot project in the Northwest and Stream Realty Partners' 616,463 square foot project, also in the same submarket.
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Anthony Russo
Anthony Russo has been contributing to GlobeSt. since July 2024. Along with CRE, his financial background expands to capital markets, the economy, and consumer issues. Previously, he has written for CapitalWatch and was a senior reporter for The US Sun.
