Q3 2015 Houston Industrial Market Research & Forecast Report
Houston’s industrial leasing activity decreases 42.7% over the quarter - vacancy rate remains under 5.0%
During the second quarter, 1.6M SF of Houston’s industrial inventory was absorbed, substantially less than the 2.7M SF absorbed in the previous quarter. Industrial leasing activity declined as well, dropping to 2.8 SF, a decrease of 42.7% from the 4.9M SF leased in Q2 2015. Much of the decline in absorption and leasing activity is due to a lack of available space as Houston still has a 4.8% vacancy factor. The 2.9M SF of new inventory delivered in the third quarter is approximately 27.0% leased. Further, 9.6M SF of inventory is under construction and is 64.4% pre-leased.
Houston’s average industrial vacancy rate increased slightly from 4.6% to 4.8% between quarters. The average citywide quoted industrial rental rate increased 2.4% between quarters from $6.80 to $6.96 per SF NNN. The average rental rate has increased 9.3% on a year-over-year basis from $6.37 per SF NNN. Rental rates are not expected to change much, if any, in the near-term.
The Houston metropolitan area created 38,400 jobs between August 2014 and August 2015, an annual increase of 1.3%. Sectors creating most of the jobs contributing to the annual increase include Legal Services and Accommodation & Food Services. Employment sectors that lost the most jobs over the year include Durable Goods Manufacturing and Real Estate & Rental and Leasing.
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