NAI: Rail-Served Buildings Doing OK

The vacancy rate among Houston’s industrial sector in Q4 2016 was 5.7%, below the historic 95% confidence interval of 6.1%-6.8%, according to NAI Partners’ Data InSight report. However, the report pointed out that industrial products are different, pointing out that, while metrics for crane-served buildings in Houston have softened (thanks to the volatile oil market), rail-served buildings are doing quite well.

Rail-served industrial has an interesting history in and around the Bayou City. NAI Partners indicated that vacancy rates were 15%-17% in the 2002-2004 timeframe. But in 2015-2016, that vacancy has ranged from 2%-4.5%.

The reason for the viability of rail-served industrial is due to fewer deliveries in recent years, along with growing demand in the market, particularly in the southeast submarkets, which is home to increased production of petrochemicals and plastics, according to J. Nathaniel Holland, NAI Partners’ chief research and data scientist.

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