Houston Industrial Market Report

Southern areas facing the greatest supply headwinds. From the end of 2019 through the midpoint of this year, Houston’s industrial inventory expanded by nearly 20 percent. That influx of more than 110 million square feet gave tenants a plethora of options and created notable vacancy pressure as demand slowed over the past 18 months. During that six-quarter span ending in June 2024, Houston’s vacancy rate swelled by 240 basis points to 7.5 percent. Removing the properties built in 2020 or later, however, the metro’s rate rose by only 30 basis points during that stretch to 4.0 percent. This trend is evident in the areas adding the most new supply such as the Southeast and Southwest corridors, where vacancy rates surpassed 9.0 percent in June. A thinning construction slate on a marketwide level, however, should provide greater stability as 2024 progresses.