The Houston industrial market experienced a positive absorption of 3.6 million square feet in the second quarter, resulting in a mid-year total of 7.3 million square feet (msf). According to Avison Young’s report, although there was a decrease of 51.1% in net absorption during the first half of 2024 compared to last year, it still remains above the healthy pre-pandemic average by 21% (2016-2019).
In terms of development, nearly double the amount – approximately 6.0 msf – was delivered by developers for new industrial space in Houston during Q2 as compared to pre-pandemic times when only an average of about half that amount was delivered at just over three-quarters msf per quarter on average.
This has resulted in reducing the construction pipeline significantly down from its peak level since back around late-2017 and early-to-mid-2018 time frame when it had been up near or even above almost twice this current level at around or slightly below one-quarter more than two-thirds higher than now with roughly between eleven-and-a-half and twelve-and-a-half msf under way then versus currently having less than twelve-and-one-third percent lower at just over eleven-point-five-or-so-msf underway presently.
However despite this decline which is considerable enough that we have not seen such low levels since back before four years ago now going into five years ago already as far back as all-the-way-back-to late-in-the-second-quarter-of-twenty-seventeen sometime right after June twenty-first but before July fourth weekend holiday break period begins really so let us say perhaps somewhere within those few days either immediately prior thereto or else shortly thereafter instead thereof whenever exactly would be most appropriate hereof notwithstanding any other factors whatsoever otherwise affecting same meanwhile while things are still looking good overall despite some minor setbacks along way including recent uptick which pushed vacancy rates up by thirty basis points (bps) from the prior quarter and a substantial 180 bps year-over-year.
Moreover, the Port of Houston has seen an increase in container traffic by 21% as of May 2024, handling a total of four million TEUs in the past twelve months. This is indicative of strong industrial activity despite being off all-time highs.
