'So Many Different Forces' Driving Houston Industrial Activity
Developers are responding to strong demand indicators in Houston’s industrial market, helping boost construction activity 7.1% quarter-over-quarter, according to JLL.
Houston had 21.8M SF underway as of the first quarter, and its construction pipeline growth outpaced the national average. The U.S. saw a 2.2% quarter-over-quarter increase in construction activity in Q1, according to JLL.
The Houston region's industrial development has continued on an upward trajectory since dropping to a low of 11M SF in mid-2024 following record-high deliveries of more than 35M SF in 2023.
About 24% of the industrial space under construction is preleased, including eight of the 12 largest buildings under development, according to JLL’s first-quarter industrial report. The largest project in the pipeline is Chicago-based Grainger’s 1.3M SF distribution center in Hockley, which is slated for completion this quarter and is expected to create 400 jobs.
The uptick isn’t surprising, given Houston’s lack of zoning, long-term demand drivers, labor presence and population growth, and Port Houston’s record traffic, JLL Texas Research Director Rachel Alexander said.
“Developers feel comfortable breaking ground on more products, securing new sites,” Alexander said. “I'm seeing that in all submarkets and in all size ranges.”
Houston saw 8.2M SF of leasing activity in the first quarter, including three deals of more than 500K SF. The region is attracting new-to-market tenants, which accounted for 30.7% of Q1 deal activity and five of the 10 largest leases.
The diversity of Houston industrial tenants is one of its strengths, Alexander said.
Manufacturing remains one of the top industries for tenants in the market, accounting for 21% in the first quarter. That’s down from about 32% in 2025 but up significantly from less than 5% in 2020 through 2022, indicating the long-term presence of manufacturers in Houston related to onshoring trends.
The other top industries of tenants in the market swap places in each update, but logistics and distribution, third-party logistics, retail, plastics/packaging and energy/utilities followed manufacturing in February, according to JLL data.
“What gets developers, capital and even occupiers comfortable with the market is that it has so many different forces that are driving it,” Alexander said. “If there's a year where population growth isn't as strong or where there's a hiccup in port traffic or something like that, you know that there's enough other drivers to push it along.”
But both of those indicators are going strong, with Port Houston posting record traffic in 2025 and the Houston region leading the country in population growth from July 2024 to July 2025. JLL expects industrial groundbreakings to remain active across all sizes and the Houston market to absorb 20M SF or more this year.
While average asking rents grew 5% last year to 65 cents per SF per month, Houston industrial rents remain well below the national average. Starting rent growth is likely to climb another 5% this year, according to JLL.
“Our rents are more competitive than a lot of the coastal markets,” Alexander said, explaining tenant and developer interest in Houston. “We've got the labor story and, again, the population and the port.”
