280 Acres Under Roof Occupied: Houston’s Warehouse Boom

In Houston, Houston’s industrial market surged in 2020 as e-commerce boosted the demand for warehouses and construction boomed.

For the year, some 12.2 million SF of industrial space (some 280 acres under roof) was filled in the Houston area in 2020, according the Cushman & Wakefield commercial real estate firm.

“Despite a temporary pause on activity in the spring, the pandemic heightened the e-commerce boom, which resulted in strong leasing activity in the third and fourth quarters,” said Allison Bergmann of Cushman & Wakefield.

The leasing activity increase was needed because warehouse construction has been incredibly robust. In fact, many industrial market experts and analysts had been predicting that an oversupply of industrial space was bubbling up.

At year-end the industrial vacancy rate hit 10.8 percent, an increase of 90 basis points when compared to the previous quarter, Cushman & Wakefield said.

“The Houston industrial market ended 2020 strong, certainly better than anticipated given COVID-19. If first quarter leasing and absorption is robust, we could possible work through most of the excess supply that came online throughout 2019 and 2020,” said Jim Foreman of Cushman & Wakefield.

Houston’s industrial market currently has 19.4 million sq ft of industrial space under construction. Development activity is focused in the following markets, Waller County (5.1 million sq ft), Southwest-Far (3.6 million sq ft), Montgomery County (3.1 million sq ft), and Southeast-Far (2.4 million sq ft).

New projects include the 1.2 million SF Boulevard Oaks Business Park logistics park in southwest Houston, located off of Beltway 8 along West Fuqua Street. Hines is the developer. The southern stretch of Beltway 8 has been booming with new construction in recent years, emerging as a significant market.

Notable leases signed during fourth quarter include:

• Lowe’s Distribution Center, 1,500,000 million sq ft, Montgomery County
• Amazon, 1,000,000 million sq ft, Southwest-Far
• In Dunavant Distribution Center, 784,000 sq ft, Southeast, Far
• Home Depot, 657,600 sq ft, Northwest-Far
• Pioneer Technology, 404,160 sq ft, Southeast-Far
• Texas Tissue, 402,300 sq ft, Montgomery County