Houston industrial market shifts towards neutral conditions amid rising vacancy rates 

HOUSTON – By the end of the second quarter, the city’s overall industrial vacancy rate rose 30 basis points over the past quarter, from 7.4 to 7.7 percent, according to Partners Real Estate’s 2Q2024 industrial market report. 

Net absorption was 3.2 million sf, up 32 percent from the previous quarter’s 2.5 million sf. Year to date, net absorption is at 5.7 million sf. 

Leasing activity and net absorption increased over the past quarter by 26 percent and 32 percent, respectively.  

Rates remained unchanged over the past quarter but remain 3.9 percent higher than one year ago.  

The construction pipeline has been decreasing over recent quarters (down 60 percent from a year ago), but it currently outpaces demand, making it likely that the market will move from a landlord market to more neutral conditions in the latter half of 2024.  

There is little to no indication of a significant reduction in asking rates for most submarkets for the foreseeable future as overall market fundamentals remain healthy.