Q1 2025 Houston Industrial Market Report

Houston’s industrial market remains strong, underpinned by its strategic location, expanding population, and significant port activity. The vacancy rate has decreased to 7.2%, dipping below the national average for the first time in nearly a decade. Net absorption continues to surpass pre-pandemic levels, indicating sustained demand for industrial space.

 

While activity has cooled from the peaks seen in 2021-2023, leasing volume remains nearly 30% above pre-pandemic levels. In all, Houston ranks third for trailing 12-month net absorption among major US metros as the local tenant base continues to grow amid softened demand nationally.

 

The recent record wave of speculative supply has tempered overall rent growth, however, tenants are still facing significant rent increases upon renewal. Market rents have jumped 10.5% over the past 3 years and nearly 35% over the past decade.

 

As the development pipeline continues to unwind with construction starts at their lowest levels since 2017, demand-side pressure is expected to intensify. This tightening supply, coupled with sustained tenant demand, suggests that vacancy rates may decline further, potentially leading to a reacceleration in rent growth.