The month of January gets its name from the Latin language and the Roman god Janus, the god of beginnings, transition, gates, passages and endings. So, I guess it makes sense that it is the first month (in the Gregorian calendar anyway) of the year and that it causes many of us to reflect on the past year and look forward to the beginning of a new one.

The commercial real estate world is no different as we look back on what the market told us by way of transactions, absorption, deliveries of new product and overall user sentiment about the future. The length of the term a tenant is willing to sign on a lease, the price a user is willing to pay for a building and the price a developer pays for land are all examples of the market “speaking”. The beauty of markets and the law of supply and demand is that they don’t lie. Yet, there is always more to the story.

What did the markets say?

The Houston Industrial market has not traditionally been classified as a “Big Box” (buildings over 250,000 SF) market in the past and that hasn’t completely changed. However, the last few years have seen more and more spec development and build-to-suits of these buildings. Nowhere is this more evident than the West and Far West submarkets with tenants and users like Igloo, Rooms To Go, Amazon and Academy, all of whom occupy what are termed “mega-distribution centers” (1,000,000 SF plus). Ross Stores Inc. broke ground in Q4 2019 on what is expected to be a 2M SF distribution facility. This is a new trend in Houston that is likely to continue, albeit at a slower pace as the availability for developable land slowed down land transactions somewhat in 2019.

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