The Latest And Greatest In Houston’s Industrial Market
Tipping into the final days of 2018, Houston's industrial market remains robust.
Fundamentals: Steady And Healthy
The citywide vacancy rate stands at 5.4%, remaining steady from this time last month and even this time last year, according to NAI Partners' monthly market snapshot. That incredibly consistent vacancy rate is only an increase of 20 basis points over Q4 '16, even though development has accelerated.
Year-to-date net absorption climbed by 16.7% from last month to 8.6M SF, blowing past 2017’s total absorption of 6.8M SF. Leasing activity has improved by 22.8M SF year-to-date. The asking rate for industrial space remained at $0.61 in December, keeping steady during the last 30 days.
More than 10.3M SF of industrial space is under construction. Nearly 10M SF of that is planned for warehouse/distribution space. Activity has picked up since last year when 6M SF was under construction in Q4 '17, up from 4.9M SF in the last quarter of 2016, according to NAI Partners' quarterly market report.
Houston experts predict the market will remain robust for several more years.
Hot Market Alert: Southwest Houston
Chicago-based Logistics Property Co. entered the Houston market with a 97-acre logistics center in the Southwest submarket. At build-out, CityPark Logistics Center will feature 1.7M SF across seven buildings. The park is at Highway 90 and the Sam Houston Tollway and borders both Harris and Fort Bend County. Construction is slated to begin in Q1 and deliver by year-end 2019.
Finial Group and partner Senterra are developing Independence Business Park, a 145K SF spec industrial park for midsize tenants in the Southwest Houston submarket. The park will target oil- and gas-related companies.
These deals represent a spark in the underserved Southwest submarket. It ranked fifth of seven Houston submarkets for industrial development activity, only ahead of the Downtown and South submarkets.
Costco Coming To Katy In A Big Way
Costco will develop a major distribution center in Katy after Houston-based Hines and Katy Partners reportedly sold the 105-acre land parcel to the retailer. The sellers previously announced plans to develop the Pintail Crossing Business Park on that tract.
In a release Monday, Hines confirmed the deal and announced the user will develop and own a large-format distribution center serving Katy and the surrounding areas.