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Despite Oil Slump Industrial Real Estate Shines — But For How Long?

While Houston is facing near-term challenges, industrial real estate continues to thrive. But will the party stop soon? Finding out the answer is why we're excited to discuss the impacts of low oil prices on industrial real estate with the experts at our 6th annual Bisnow Industrial Real Estate event on Feb. 2 at the Hyatt Regency Houston Galleria, starting at 7:30am. Bisnow got the low-down on the slowdown from our panelists. 


Industrial absorption was strong last year and should continue into 2016, says Arch-Con SVP Jason Cooper. As the office market slowed over the last year, retail and hospitality picked up the slack. Jason's had steady industrial deal volume, but says the luck can't hold out forever. He expects the oil pricing collapse to make its way to industrial with a slowdown next year. It will manifest with more subleases as oil service companies contract. 

The bright spot: The Southeast/Port submarket, which logged nearly 1.7M SF of absorption in December alone. That's led to a void of large blocks of contiguous space to lease. If you're looking for 250k SF or more, your options are limited, which could be an opportunity for spec development this year.


Vivgavi managing director Luis Rene Garza Villarreal agrees with Jason that the industrial submarket hasn’t seen a major impact of low oil prices yet, and says if the commodity prices don't level off, we’re due for a correction.

Manufacturing has strong momentum, so he’s still seeing big spaces up to 100k SF move. In fact, he’s even working on a deal for over 50 acres in North Houston that will accommodate up to 500k SF of industrial space.

The investment is there for big projects like that, and Luis tells us he's benefiting from a strong backlog in the downstream and distribution areas. We'll delve into the hotspots and weak spots of the industrial market at Bisnow’s 6th annual Industrial Real Estate event on Feb. 2, starting at 7:30am at the Hyatt Regency Houston Galleria, you’ll hear how to protect the downside to your investments in those areas. Register here.