Houston’s industrial market remained extremely active during Q4 with leasing velocity over 11.2 million square feet. The increase in demand for space continues to spur new development with 33.6 million square feet under construction and an additional 55.8 million square feet proposed or in the final planning stage. Houston’s industrial market recorded 5.4 million square feet of positive net absorption in the fourth quarter, pushing the year-end 2022 total to 28.9 million square feet. The vacancy rate remained steady at 5.6% over the quarter and decreased from 6.5% annually.
The forecast in the above graph is based on a trailing 4-quarter historical average.
*Colliers Transaction
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The Port of Houston seems to be the main driver, with double-digit container volume growth year-over-year as companies search for more efficient supply chain alternatives. Port Houston has plans to build a third terminal which entails constructing wharves, adding much needed container yard space, and widening and deepening the Houston Ship Channel to make way for larger and increased vessel volume.
When complete, “Project 11” will widen the channel from 530’ to 700’, deepen some segments to 46.5’ and institute other safety and efficiency improvements. Port Houston Chairman Ric Campo notes that the project is expected to yield a $134 million dollar annual economic impact once delivered, which will consequently lead to more jobs and increase container traffic.
Rising interest rates have created a gap between land sellers and developers so we expect a slow down on both investment sales and land sales for new industrial development. There is still a big appetite from users to own their own facilities, thus we have not seen a decline in listing prices from sellers with functional and efficient inventory. As interest rates stabilize, we expect sales volume to increase on both the investor and user side.
Business Park/Address | Submarket | RBA | % Leased/ Owned | Est. Delivery Date | Developer/ Owner |
NorthPort Logistics Center | The Woodlands/ Conroe | 1,224,498 | 0% | Q2 2023 | Lovett Industrial |
TGS Cedar Port - DC 4 | East-Southeast Far | 1,218,956 | 0% | Q2 2023 | TGS Group |
I-10 West Trade Center | Sugar Land | 1,051,080 | 0% | Q1 2023 | Hunt Southwest |
Interchange 249 - B8 | Northwest | 908,853 | 100% | Q3 2023 | Clarion/Lovett |
Kingsland Ranch Logistics Park - B3 | Sugar Land | 855,610 | 0% | Q2 2023 | Falcon/Clarion |
Grand Central West - B2 | Northwest Outliers | 843,360 | 0% | Q1 2023 | PinPoint Commercial |
Woods Road Business Park - B2 | Sugar Land | 836,120 | 0% | Q1 2023 | Crow Holdings Industrial |
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