Q2 2015 Houston Industrial Market Report

HOUSTON - July 28, 2015 - PRLog -- Houston’s industrial market leasing activity and absorption declines in Q2 due to limited available space .

During the second quarter, 2.7M SF of Houston’s industrial inventory was absorbed, substantially less than the 4.3M SF absorbed in the previous quarter.  Industrial leasing activity declined as well, dropping to 3.3M SF, a decrease of 30.0% from the 5.0M SF leased in Q1 2015.  Much of the decline in absorption and leasing activity is due to a lack of available space as Houston has a 4.6% vacancy factor.  In addition, only 1.2M SF of new inventory delivered in the second quarter, which is 25% of the space delivered in the previous quarter.  Fortunately, there is 10.6M SF of inventory under construction and 5.7M SF is speculative development.

Houston’s average industrial vacancy rate decreased slightly from 4.7% to 4.6% between quarters, and decreased from 5.3% over the past year. The citywide average quoted industrial rental rate increased 4.2% between quarters from $6.62 to $6.90 per SF NNN.  The average rate has increased 10.9% on a year-over-year basis from $6.22 per SF NNN.

The Houston metropolitan area created 62,300 jobs between May 2014 and May 2015, an annual increase of 2.1% over the prior year’s job growth. Sectors creating most of the jobs contributing to the annual increase include Retail Trade, Transportation, Warehousing and Utilities (mostly due to truck and pipeline transportation), Accommodation & Food Services, Arts, Entertainment & Recreation, and Health Care & Social Assistance.


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