Although Houston’s economy slowed significantly in 2015 and remained weak in 2016-2017, the demand for consumer products continues to spur growth in the industrial sector. Companies like Amazon, Walmart, Best Buy and FedEx are just some of the tenants in the market leasing, building, or moving into distribution and logistics hubs. During the first quarter of 2018, developers have been busy constructing over 9.2M SF of new industrial inventory, 6.6M SF of which is speculative. Much of the development and leasing activity is located in the East-Southeast Far submarket and can be tied directly to Houston’s Port activity.

The average vacancy rate only increased 10 basis points over the quarter, even though 2.1M SF of new inventory was completed.

Over 1.5M SF of Houston’s industrial inventory was absorbed during the first quarter of 2018. Companies such as Amazon, Kuraray America, GHX, Flexo and Air General relocated and/or expanded during the first quarter.

According to the U.S. Bureau of Labor Statistics, the Houston MSA created 67,100 jobs (not seasonally adjusted) between February 2017 and February 2018, an annual growth rate of 2.2%, which is above the national average job growth rate of 1.6%.

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