The Houston metro-are industrial market continued its run of positive net absorption in the third quarter of this year, although at lower net gains when compared to previous quarters as new deliveries and an increase in sublease space outpaced demand. According, vacancy levels rose through the market to 6.6% from 6.0% in the second quarter of 2019. However, strong positive absorption of almost 6.3 million square feet over the past 12 months ranks Houston in the top 10 among the nation’s metro markets.
Area population growth, coupled with an improved unemployment rate (3.9% in Aug. ’19 from 4.4% in Aug, ’18), is spurring the additional 18.6 million square feet of mostly speculative logistics developments currently under construction, as developers look to capitalize on increased demand for distribution and warehouse facilities in the e-commerce supply chain. While the delivery of these projects most likely spell an increase in the market’s overall vacancy rate in the near term, optimism on sustained demand for individual space with higher clear heights and green features could see Houston’s industrial market continue its trend of positive net absorption.
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