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Q2 2014 Houston Industrial Market Research & Forecast Report
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Houston's Industrial Market Delivers 5.6M SF of New Inventory in the First Half of 2014
Houston’s industrial market remains one of the healthiest U.S. industrial markets, its continued expansion sustained primarily due to the growth in the oil and gas industry. Texas is expected to produce more oil and gas than 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 rapidly increasing production.
During the second quarter, 1.6M SF of Houston’s industrial inventory was absorbed, bringing year-to-date net absorption to a positive 3.3M SF. Industrial leasing activity which includes renewals, reached 3.3M SF, almost 1M SF less than seen in the previous quarter. 2.6M SF of new product delivered during the second quarter, pushing 2014 year-to-date deliveries to 5.6M SF. Additionally, 3.9M SF of industrial space is currently under construction. Houston’s average industrial vacancy rate remained unchanged between quarters at 5.5% and increased 60 basis points from 4.9% to 5.5%, year to date. The citywide average quoted industrial rental rate decreased 0.3% between quarters from $6.11 to $6.09 per SF NNN, and increased 5.0% on a year-over-year basis from $5.80 per SF NNN.
The Houston metropolitan area added 93,300 jobs between May 2013 and May 2014, an annual increase of 3.3% over the prior year’s job growth. Local economists have forecast 2014 job growth to remain strong, expecting between 68,000 and 72,000 new jobs. Houston’s unemployment rate fell to 5.0% from 6.1% one year ago. Houston area home sales were down by 7.3% between May 2013 and May 2014, the first decline in the past 34 months. The reduction was due almost primarily to a lack of inventory.
Houston’s economy is expected to remain strong in 2014 due to healthy job growth and continued expansion in the energy sector.
Release Date07/15/2014 - 07:00