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HOUSTON-With the area’s industrial sector continuing to boast a single-digit vacancy, the Port of Houston and its surrounding area in southeastern Houston are driving the region’s demand. As a result, there is 2.8 million sf to 3.8 million sf coming out of the ground.

“The port’s rapid growth and expansion is leading much of the increased market demand for industrial space in the area,” Gary Mabray, a Houston principal for Colliers International Inc., tells GlobeSt.com. “While there may be a lag in leasing or selling the new product coming to market, tenant demand is strong.”

Mabray credits the overall Greater Houston activity due to both increasing business at the Port of Houston and the booming energy industry. Both drivers, he points out, only mean an increase in the demand for distribution space.

Darryl Noon, Transwestern’s senior vice president points out that Bayport Terminal, which opened earlier this year, also is driving demand and expansion, particularly expansions. “Once they get space leased up on their projects, developers will likely kick off the second and third phases,” he says.

The overall vacancy is 6.3% in the 432-million-sf inventory, according to Colliers International Inc.’s third-quarter report. In the far southeast corridor, researchers peg vacancy at 11.1% in its 29 million sf of product. Since the year started, 1.3 million sf has come on line and another three million sf is under construction.

Transwestern Houston’s research team puts vacancy at 5.5% in a 424-million-sf inventory. Net absorption was 6.4 million sf. Its team puts the 27.1-million-sf southeast far submarket at 8.5% vacant, with another 3.8 million sf being built. Nonetheless, the submarket led in terms of absorption at 2.5 million sf.

Both brokers agree the port will continue to see healthy demand, absorption and more space coming on line so long as energy and job growth continue. “With distribution activity driving much of the industrial market, many developers have begun to plan projects with more land than usual,” Mabray says. “The excess land is allowing for several adjunct facilities, including trailer parking and outside storage facilities.”

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