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Vacancy and availability have been edging up over the past few quarters, although the market remains tight.

Net absorption for the overall industrial market is at 1.3 million sq. ft. year-to-date. For full-year 2016, total net absorption was 10.4 million sq. ft. Direct space absorbed 11.4 million sq. ft., more than enough to balance the negative 1 million sq. ft. from sublease space.

The Houston industrial market has not ended a full year with overall negative absorption since NAI Partners began tracking the data, over 18 years ago.

The construction pipeline is at 4.9 million sq. ft. year-to-date, including 1.3 million sq. ft. of construction projects that started in 2017. All current construction except 500,000 sq. ft. is scheduled to deliver in 2017, with 65% of that total pre-leased, including facilties for Amazon, FedEx, IKEA and Katoen Natie.

Construction is concentrated in the North, Northwest and Southeast submarkets, which make up 90% of all activity.

Leasing activity has gradually slowed during the past five quarters, after hitting a quarterly peak in Q4 2015 of more than 9 million sq. ft. As the market begins to stabilize, 295 deals took place in Q1 2017—a 23% decline—compared to the quarterly average in 2016 of 383 deals.

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