Houston Industrial Market Report | Q4 2023

HOUSTON - Jan. 24, 2024 - PRLog -- "The Houston industrial market, supported by the Port of Houston as well as population and positive in-migration trends, continued to grow during the year, albeit slower than the record-setting pace in previous years. As construction accelerated post-pandemic, developers completed buildings faster than tenants could absorb in 2023, which caused a slight increase in vacancy. Developers took notice and slowed construction, resulting in 43% less square footage under construction at the end of the year compared to this time period last year.

Tenant activity remains positive, with fourth quarter's nearly 9 million square feet of leasing transactions a jump of over 1 million square feet from third quarter. With tenant activity forecasted to remain robust, much of the added supply is expected to be absorbed in the coming year as the market rebalances after the elevated activity experienced post-pandemic."

Danny Rice | President

Key Takeaways

• Construction starts slow
• Deliveries and absorption drop
• Leasing activity up for quarter
• Vacancy rises

Houston Highlights

The industrial market's activity slowed on all levels during the fourth quarter with new supply outpacing net absorption each quarter during the year. For this year, twice as much new product, 31.6 MSF, has been delivered than absorbed, with completions just under the record-level 32.9 MSF in 2020. Leasing activity jumped 1.1 MSF to 8.9 MSF from the previous quarter, with this year's 35.9 MSF about 25% down from each of the last two years' record levels. The overall vacancy rate increased 50 basis points to 7.0% from 6.5% in Q3 2023 with new product vacancies contributing to the uptick. Developers have reduced the construction level to 21.1 MSF following the record-level 37.2 MSF year-over-year. Positive net absorption this quarter was 2.4 MSF, bringing the 2023 total to 17.3 MSF, about 60% of 2022's net absorption of 28.9 MSF. Rents nudged up to $9.39 NNN PSF from $9.35.

Read the full report: colliers.com/en/research/houston/q4-2023-houston-industrial