Houston’s industrial market continues to expand, adding 4.4M SF to its inventory in the third quarter, an increase of 158.8% over the quarter. There is another 10.3M SF under construction which is scheduled to deliver over the next two quarters. Some of the tenants that have or will be occupying the new inventory include Grocers Supply, Best Buy, and Conn’s HomePlus, to name a few. Not all of the new construction is pre-leased which will increase the vacancy rate, but Houston’s industrial market is healthy and the vacancy rate increased by only 40 basis points over the quarter from 5.3% to 5.7%. Year-to-date, 85 industrial buildings have been completed adding over 9.5M SF to Houston’s industrial inventory.

Houston’s net absorption jumped significantly over the quarter, increasing 157% from 0.7M SF to 1.8M SF. A vast majority of the leasing activity can be attributed to an expanding population driven by job growth which increases consumer spending and demand for logistics and distribution hubs.

Houston’s job growth increased by 3.7% over the year according to recent data released by the US Bureau of Labor Statistics. The Houston MSA created 101,200 jobs (not seasonally adjusted) between August 2017 and August 2018, growing faster than Texas and the U.S. during the same period. Employment sectors with the most substantial growth include construction which grew by 13.5% over the year, and professional and business services which increased by 7.2%.

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