Houston Industrial’s Second-Quarter Absorption, Leasing Declines

HOUSTON (Colliers International) – Absorption in the city’s industrial sector dropped substantially between the first and second quarter of this year, reports Colliers International in its latest market report.

Second-quarter absorption was at 2.7 million sf compared with the first quarter’s 4.3 million sf.

Industrial leasing was also down, dropping to 3.3 million sf, a 30 percent decrease from the five million sf leased in the first quarter.

Much of the decline in absorption and leasing activity is from a lack of available space (overall industrial vacancy is at 4.6 percent). In addition, only 1.2 million sf of new inventory was delivered during the second quarter, which is 25 percent of the amount delivered in the previous quarter. However, 10.6 million sf is under construction, 5.7 million of which is speculative development.

The city’s average industrial vacancy rate decreased slightly from 4.7 percent to 4.6 percent between quarters. The citywide average quoted industrial rental rate increased 4.2 percent between quarters from $6.62 to $6.90 per sf triple net. The average rate increased 10.9 percent on a year-over-year basis from $6.22 per sf triple net.