STRENGTH OF HOUSTON INDUSTRIAL CONTINUOUSLY UNFAZED BY ECONOMIC FLUCTUATIONS
Vacancy has held below 10% for nearly 25 years
Generally speaking, when the vacancy rate is above 10% the market is considered tenant favorable, while 8% to 10% would be considered neutral conditions. When the vacancy rate is below 8% it is a landlord favorable market. Outside of very short windows of time, usually coming out of recessions, Houston’s industrial market has consistently been favorable to landlords. There are some data points (the rise in the availability rate and the high construction pipeline) that indicate that a moderate increase in the total vacancy rate is likely over the next year or more.
HOUSTON INDUSTRIAL HISTORICAL CHART
Even with the various business cycles, the Houston industrial market has remained healthy with the total vacancy rate staying well below 10%. This coupled with the surge in relocations to Texas over the past few years has resulted in unprecedented rental rate growth.
Even with the anticipated increase in the vacancy rate, at sub 6% currently, the market is not likely to shift out of landlord favorable conditions for the foreseeable future. These tight market fundamentals have resulted in record high rate increases over the past few years.
HOUSTON INDUSTRIAL HISTORICAL CHART
The record high surge in asking rates is not just reflected in the base rate, but also in annual escalations.
*Data includes all industrial properties over 20,000 SF (excluding flex) for the Houston market.
Steve Triolet
Senior Vice President of Research and Market Forecasting
[email protected]
tel 214 223 4008