Q2 2016 Houston IndustrialMarket Research Report
During the second quarter of this year, 0.6M SF of Houston’s industrial inventory was absorbed, substantially less than the 2.7M SF absorbed in the second quarter of the previous year. Houston’s industrial market shows signs of slowing due to the downturn in the local economy caused by massive job cuts in the energy industry. Industrial leasing activity dropped 55% over the year to 3.6M SF from 8.0M SF in Q2 2015.
The average vacancy rate increased 110 basis points over the year to 5.5% from 4.4% in Q2 2015. Over 62% of the 3.4M SF of new construction delivered in Q2 2016 was pre-leased and 71% of the 11.9M SF currently under construction is pre-leased. The space under construction is only 2.3% of the total existing industrial inventory in the Houston market today.
The average citywide quoted industrial rental rate increased 3.7% on an annual basis to $6.93 per SF NNN from $6.88 per SF NNN in Q2 2015.
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