HOUSTON – (Realty News Report) – Houston’s industrial market experienced a major surge in 2020 as a shift to e-commerce increased demand for distribution and warehouse space, while construction activity remained strong.
Over the year, roughly 12.2 million square feet of industrial space—about 280 acres under roof—was absorbed in the Houston area, according to commercial real estate firm Cushman & Wakefield.
“Despite a temporary slowdown in the spring, the pandemic accelerated the e-commerce trend, producing robust leasing activity in the third and fourth quarters,” said Allison Bergmann of Cushman & Wakefield.
This uptick in leasing was necessary given the significant volume of new warehouse construction. Many market observers had previously warned that rising deliveries could create an oversupply, but strong leasing helped offset that risk.
At year-end, the industrial vacancy rate stood at 10.8 percent, up 90 basis points from the prior quarter, Cushman & Wakefield reported.
“The Houston industrial market closed 2020 on a strong note, performing better than expected under COVID-19 conditions. If first-quarter leasing and absorption remain solid, we could work through a large portion of the excess supply that came online in 2019 and 2020,” said Jim Foreman of Cushman & Wakefield.
Houston currently has approximately 19.4 million square feet of industrial space under construction. The majority of development activity is concentrated in a few key submarkets: Waller County (about 5.1 million square feet), Southwest-Far (3.6 million square feet), Montgomery County (3.1 million square feet), and Southeast-Far (2.4 million square feet).
One of the notable new projects is the 1.2 million square foot Boulevard Oaks Business Park, a logistics development in southwest Houston situated near Beltway 8 and West Fuqua Street. Hines is the project developer. The southern corridor of Beltway 8 has seen substantial new construction recently and has emerged as an important industrial hub.
Major leases signed in the fourth quarter included:
- Lowe’s Distribution Center — 1,500,000 square feet, Montgomery County
- Amazon — 1,000,000 square feet, Southwest-Far
- Dunavant Distribution Center — 784,000 square feet, Southeast-Far
- Home Depot — 657,600 square feet, Northwest-Far
- Pioneer Technology — 404,160 square feet, Southeast-Far
- Texas Tissue — 402,300 square feet, Montgomery County
Jan 14, 2021 Realty News Report. Copyright 2021.
File: Houston’s Warehouse Boom
Caption: Boulevard Oaks Business Park. Courtesy: Hines
File: (2) 19.4 million SF under construction in Houston’s Warehouse Boom. Cushman & Wakefield.