Q4 2014 Houston Industrial Market Research & Forecast Report
Houston’s Industrial Market Records 10.2M SF of Positive Net Absorption in 2014 -
During the fourth quarter, 1.9M SF of Houston’s industrial inventory was absorbed, pushing year-end net absorption to 10.2M SF. Industrial leasing activity, which includes renewals, reached 3.4M SF in Q4.
1.4M SF of new product delivered in the fourth quarter, bringing the year-end total to over 8.6M SF. Additionally, almost 8.0M SF of industrial space is currently under construction and all but 650,000 SF is scheduled to deliver in 2015.
Houston’s average industrial vacancy rate decreased from 4.9% to 4.8% between quarters, and decreased from 5.3% over-the-year. The citywide average quoted industrial rental rate decreased 0.8% between quarters from $6.15 to $6.20 per SF NNN, and increased 4.0% on a year-over-year basis from $5.96 per SF NNN.
Houston’s industrial investment sales market is benefiting from the foreign capital that is pouring into the U.S. According to a recent survey by the Association of Foreign Investors in Real Estate (AFIRE), Houston ranked #3 in the top five U.S. cities for foreign investors.
The Houston metropolitan area created 120,600 jobs between October 2013 and October 2014, an annual increase of 4.3% over the prior year’s job growth. Sectors creating most of the jobs contributing to the annual increase include mining and logging, construction, transportation, warehousing and utilities, and health care and social assistance. Houston’s unemployment rate fell to 4.7% from 5.9% one year ago.