Moreover, the market saw 392 new industrial buildings added during the 2013-2017 timeframe, a 23 percent increase in the number of industrial buildings delivered from previous five years, according to real estate services company, JLL.
Throughout the five-year period, Houston maintained an average total vacancy rate of 4.8 percent. This means even as construction and deliveries ramped up significantly during the 2013-2017 timeframe, total vacancy actually decreased 90 basis points from the average total vacancy rate during the 2008-2012 time period.
Rents are rising too. The latest industrial report shows the average industrial rent rate across all product types is $6.15 per square foot, according to JLL research. The average rent rate in Dallas-Fort Worth, long considered an industrial powerhouse, was $4.41 per square foot as of October, per JLL.
Houston has been a latecomer to the unprecedented growth of e-commerce, but it is narrowing the gap. Not only has the city seen multimillion-square-foot investments by Amazon, UPS, FedEx and others, providers for these major distributors are seeking to establish regional distribution and return centers related to online sales.
A broad swath of industry types are actively in the Houston market for space, providing even more opportunities for developers. Approximately 2 million square feet of industrial space has delivered so far this year, and another 6.7 million square feet of industrial space is currently under construction.
Of the deliveries this year, 86 percent have been pre-leased. That is up significantly even from recent years – 65 percent of deliveries were preleased in 2017, and 54 percent of deliveries were preleased in 2016.
And new construction is continuing. The development firm Hines recently announced Pintail Crossing, a 2.2 million-square-foot industrial park, and NAI Partners announced plans for a rail-served business park in El Campo capable of accommodating 10 million square feet.
After outpacing move-ins for three of the last four years, deliveries in Houston are almost completely in balance with absorption for 2017, meaning Houston’s industrial market will likely have a hot summer.