Houston's Industrial Market Closes Year At 10-Quarter Vacancy Low
Houston's industrial market closed 2018 strong, with overall vacancy at a 10-quarter low of 5%, decreasing by 10 basis points quarter-over-quarter. Industry leaders expect the market to keep that same energy into the new year.
Demand for industrial space remained healthy as 3.4M SF was absorbed in Q4, pushing the year-end total to 10.6M SF, according to CBRE's industrial market quarterly report.
The Northwest and Southeast submarkets were particularly busy in the fourth quarter and consequently logged strong year-end totals. Northwest noted positive absorption of 2.7M SF in Q4, bringing year-end total net absorption to 5.4M SF. Southeast saw year-end net absorption of 3.2M SF with 750K SF coming in the fourth quarter.
Four of the five biggest deals last quarter were in the Southeast market. Valvoline inked a 473K SF lease at Port Crossing Commerce Center at 1302 Wharton Weens Blvd. in La Porte. Unis signed a 248K SF lease at Bayport South Business Park at 10565 Red Bluff Road in Pasadena.
NT Logistics Inc. agreed on a 226K SF lease at Ameriport Industrial Park in Houston. Smart Warehousing signed a 150K SF lease at Energy Commerce Business Park in Pasadena.
The only major non-Southeast deal in the top five was Palmer Distribution inking a 168K SF lease at Railwood Industrial Park in the Northwest submarket.
Industrial construction activity also hit a record-breaking milestone. The market saw 16.3M SF of new product break ground in 2018, which is 3.7M SF higher than the 2014 record high, CBRE reported. It was boosted by an active Q4, when 5.9M SF of industrial space was launched.
North Houston has been the major benefactor of the new activity as 5.1M SF of the 14M SF of industrial space underway is within the submarket. Vacancy in the North Houston submarket, bounded by Interstate 45, Highway 59, Highway 249 and the George Bush Intercontinental Airport, stands at 7%.