Houston's Industrial Market Shows No Signs of Slowing in 2014
Houston’s industrial market remains one of the healthiest U.S. industrial markets sustained primarily due to the expansion in the oil and gas industry. Texas is expected to out-produce all but one of the OPEC nations in 2014 due to the booming Eagle Ford Shale and Permian Basin, and Houston’s industrial real estate market will benefit from that growth.
During the first quarter, 1.9M SF of Houston’s industrial inventory was absorbed. Industrial leasing activity which includes renewals, reached 5.8M SF, twice the amount leased in the previous quarter. 2.9M SF of new product delivered during the first quarter and 4.0M SF of industrial space is currently under construction. Houston’s average industrial vacancy rate rose by 20 basis points between quarters from 5.2% to 5.4% due to new inventory deliveries. The citywide average quoted industrial rental rate increased 2.4% between quarters to $6.06 from $5.92 per SF NNN, and increased 6.7% on a year-over-year basis from $5.68 per SF NNN.
The Houston metropolitan area added 91,300 jobs between January 2013 and January 2014, an annual increase of 3.4% over the prior year’s job growth. Local economists have forecast 2014 job growth to remain strong, adding between 68,000 and 72,000 jobs. Houston’s unemployment fell to 5.6% from 6.9% one year ago. Houston area home sales increased 8.35% between February 2013 and February 2014 and the average price of a single-family home rose 12.5% over the year.
Houston’s economy is expected to remain strong in 2014 due to healthy job growth and continued expansion in the energy sector.