Houston Industrial Market Fundamentals
Houston Industrial Market Shows Continued Strength
June 2006
By J. Michael Boyd, CRE, SIOR
President, Boyd Commercial, LLC
For the past 18 months, Houston's industrial market has steadily climbed upward, the most prominent activity occurring within the last five months. The overall occupancy rate for industrial properties has increased to approximately 92%. First quarter absorption of industrial space topped 2.1 million square feet. However, service center space continues to lag distribution and manufacturing buildings with an occupancy rate of approximately 88%.
Houston New Projects
A number of new speculative developments are in the planning and/or construction phases in almost all quadrants of Houston.
Houston Southeast Market
The southeast market, driven by expanding port activity and a vibrant petrochemical industry, has new projects under construction by Clay Development, John Frantz, Transwestern, the Vantage Company and National Property Holdings.
Houston North Market
In the north market, in proximity to the Intercontinental Airport, new projects have been completed by Insite, Cypressbrook and Liberty Property Trust. Companies with projects in the planning and/or construction phase include, IDI, Verde, Trammell Crow, Moody Rambin and Caldwell Watson.
Houston Western Market
Along the western reaches of the Sam Houston Tollway, developers with projects either under construction or which have been recently completed include, Insite, Vantage, Holt, McShane, Davis Commercial, Prologis, Granite and Trammell Crow.
Thus far, 2006 is shaping up to be the best year for industrial activity and absorption in the current cycle. However, given the amount of new construction, we may actually see an increase in the vacancy rate by the first quarter of 2007. This will depend on the timing of the completion of the projects mentioned above and the velocity of absorption in the third and fourth quarters of this year.
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