Houston Industrial Market Indicators All Positive

Office news first. Houston continued to see healthy population and employment growth; however, those metrics did not translate to robust office market trends in Q1 2024. Lee & Associates reports the vacancy rate edged up slightly as new inventory was delivered, and net absorption and rental rates decreased. The construction pipeline has tempered down, and with the current state of capital markets, we expect this trend to continue which will help the overall outlook of the office market. Tenants continue to flock to newer office buildings, so landlords with older inventory will need to stay competitive by investing in capital improvements. The vacancy rate was 21.5% for the quarter and rent came in a $30.43 PSF.

The industrial outlook was much more positive. Rent prices, leasing activity, net absorption, deliveries of new buildings and projects to be delivered were all up in Houston in Q1 2024.