Houston Industrial Market Strengthening

by CoyDavidson on October 26, 2010

Houston Industrial Market Report 3Q 2010

Houston’s industrial market fundamentals continue to strengthen, with 1.8M SF of positive net absorption in the third quarter bringing the year-to-date total to 4.4M SF, an improvement from the positive net absorption of 1.6M SF recorded through the third quarter last year. Occupancy also posted a slight gain with the citywide average at 93.9% in the third quarter, up from 93.2% at this time last year.While quoted rental rates for industrial space fell below levels for the same period last year, rental rates remained stable from the previous quarter. On the leasing front, nineteen leases over 100,000 SF were signed year-to-date through the third quarter, with six leases over 200,000 SF. A significant boost to the market’s stabilization has been disciplined curtailment of new speculative construction activity, with only 218,918 SF in the construction pipeline at the close of 3Q10, compared to 1.7M SF under construction at this time last year.

Looking forward, Houston’s industrial sector is expected to improve gradually as key economic drivers move towards recovery. The Port of Houston has been instrumental in Houston’s development as a center of international trade. Over 100 steamship lines offer service linking Houston with 1,053 ports in 203 countries. It is also home to a $15 billion petrochemical complex, the largest in the nation and second largest worldwide. Houston is a key player in the Break-bulk and Logistics sector.

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