Manufacturing demand and strength of port lead vacancy lower amid slowing economy

Year-over-year vacancy slid 250 basis points (bps) to 5.3%. Absorption has now exceeded deliveries for six straight quarters, a remarkable feat even for the historic powerhouse that is Houston’s industrial market. Houston is not faced with the same land constraints, supply and cost of other major port markets, such as the Inland Empire and Northern New Jersey. The developer-friendly circumstances have historically kept occupancy rates below the U.S. average. As a construction pipeline totaling 32.9 million square feet (msf) continues to deliver new product, expect near-term vacancy to increase and velocity of rent growth to slow.

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