As Houston rides a wave of positive industrial fundamentals from onshoring investment, data center development and port traffic growth, developers want to develop and lenders want to lend.

But not everyone who wants to can build.

Brokers and developers say that while starts are picking up, difficulty securing equity is constraining the supply pipeline, keeping it well below the record volume delivered in 2023.

Just over 20M SF was under construction at the end of 2025, the most since the second quarter of 2023, according to CBRE’s second-quarter report. That fell to about 18M SF in the second quarter, but another 4M SF of projects broke ground in July and August. 

This wave comes as 1M SF developments return to the Houston market. Last month, Trammell Crow Co. broke ground on Phase 2 of a 2M SF industrial park, and Port 99 Phase 2, totaling about 1.3M SF, secured development financing.

Common equity is available for ground-up industrial development, but institutional equity partners have been harder to come by, Northmarq Senior Vice President Taylor Phillips said. Institutional investors have the pick of the litter amid a robust pipeline of deals, and many groups still have heartburn over 2021 deals that took longer than expected to lease up, he said.

“In 2021, 2022, a lot of these deals got capitalized by an institutional equity partner who would provide 95% of the equity and the GP would put in 5%, and they go on and do the development,” Phillips said. “Now that has dried up quite a bit.” 

The developers having the most success are those that can use equity they raised themselves to make up about 20% of the capital stack, he said. 

Meanwhile, a ton of capital is available for financing. Competition from credit markets is higher than JLL has ever recorded. 

That is what Mohr Capital found when seeking financing for its 372K SF Oates 610, at 117 Oates Road in East Houston, where it broke ground in early August. 

“There's a lot more availability of financing today than there was a few years ago,” Mohr Capital Managing Director of Investments Rodrigo Godoi said.

Mohr originally planned to provide its own equity, but a family office with an existing relationship reached out wanting to get involved, Godoi said.

“That's one of the advantages we have over the smaller-sized developers, that we can go both ways if we have to,” he said.

In another success story, Atlanta-based developer Portman co-invested with an institutional equity limited partner for its first industrial development in Houston, Portman Managing Director of Investment Fritz Wyler said. Gateway 1960 will be a three-building project totaling 714K SF.

Portman was attracted to Houston’s huge population, tenant diversity and proximity to transportation infrastructure, Wyler said. The development is just north of George Bush Intercontinental Airport.

Meanwhile, lenders were enticed by Portman’s conservative capital stack.

“We are 60% loan-to-cost on our debt,” Wyler said. “With a 40% equity stack in front of it, most of the banks and life companies are pretty comfortable at that stage. Most would say that 55% to 60% leverage is the sweet spot.” 

That has gotten more flexible this year, as lenders are more willing to cover 80% to 85%, Phillips said. But some land contracts fall through if equity isn’t secured.

“A lot of projects aren't getting done because there's just no JV partner out there,” he said.

The site of Oates 610 had been under contract by multiple developers over the years, but none of those projects worked out, as the timing wasn’t right, Godoi said. 

“Sometimes it's better to be lucky than good, and we really got lucky with how this site came to us,” he said.

Investors aren’t all jumping back into industrial development, slowing the pace of development, Hanover Co. Industrial Division President David Hudson said at a Bisnow event last week. Hanover has a 301K SF industrial project in Pearland that is in the predevelopment phase.

It takes four to six months to get equity to sign a joint venture agreement, Hudson said. A developer may agree to a certain timeline in a land sale contract, knowing it will need to buy more time later.

“It gets very difficult right now,” Hudson said. “The time frame is what the investors say it is.” 

Levey Group is in discussions with a small number of prospective JV equity partners that have expressed strong interest in Levey East Belt, a three-building industrial project at the southeast corner of Tidwell Road and East Beltway 8 that will total 446K SF, President David Ebro said in a statement to Bisnow.

“Those groups have cited Levey's sponsorship history, the anticipated cost basis in the completed development, and the limited supply of shallow-bay warehouse space along the East Beltway 8 corridor among the factors driving their interest,” he said.

CBRE Senior Vice President Cape Bell said he expects industrial development to pick up more this year as third-party logistics and distribution companies whisper that they are looking at Houston again and fundamentals remain strong.

Houston’s industrial market benefits from its labor pool, Port Houston’s record traffic and pharmaceutical giant manufacturing investments, he said. The market saw 7M SF of industrial absorption in the second quarter, which is about double the first quarter’s absorption, according to CBRE. Vacancy sits at 6.7%,

At the midpoint of 2026, leasing volume reached about 17M SF. Leasing volume surpassed 9M SF in Q2 for only the third time since Q2 2023.

So even though equity is being picky, that may not be the case for long.

“I wouldn't be surprised if, because of the leasing activity in Houston, all these projects that might be looking for capital partners still get them,” Bell said.