Industrial demand continues to stay in positive territory in Houston — although activity is slowing down a bit while rents surge. The latest Savills report finds that net absorption was 9.9 million square feet, down 5.7 million square feet year-over-year.
"While net absorption has declined compared to prior year figures, it is expected to continue trending positive given the leasing activity seen in 2025," Savills said.
Why does the CRE firm make that prediction? A big factor is some of the large deals the market has seen, which were headlined by PepsiCo's 1.05 million square feet deal in the Southwest submarket in the third quarter. Other large ones include Panelmatic and Inventec, which signed new leases for 728,080 square feet and 540,000 square feet, respectively.
Also, asking rental rates soared by 8.3 percent year-over-year to reach 65 cents per square foot. The highest prices were seen in the Northwest submarket at 86 cents, followed by the South at 77 cents per square foot.
The results come as deliveries slowed by 5.3 million square feet from the previous 12 months to 18.9 million square feet, while construction ticked up by 5.5 million square feet. Meanwhile, because most of the new supply that hit the market was speculative in the third quarter — it resulted in a modest 20 basis point increase in the vacancy rate to 7.5 percent. However, Savills thinks this trend will cool down if demand remains high, with the firm predicting that net absorption will remain positive.
"Looking forward, if demand continues to keep pace with new deliveries, vacancy will continue to stabilize over the near term," Savills said.
Plus, Savills pointed to Houston's strong population growth and business-friendly climate as favorable trends for the market's industrial sector.
"The Houston market demand outlook remains optimistic as it continues to attract occupiers to the region," it concluded.
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