While demand has eased considerably since the historic levels seen in 2021-2022, Houston’s strategic location, growing labor pool and role as a key logistics and distribution hub helped the city’s industrial market post healthy leasing activity well-above pre-pandemic norms through the first half of the year. Non-farm employment hit an all-time high of 3.4 million last quarter as people continued to flock to the metro area. Yet the vacancy rate remained elevated at 7.4 percent, engorged from the 35 million square feet of new supply that delivered last year.
An additional 11.9 million square feet is in development, however, the pipeline is emptying as higher borrowing costs have led to a slowdown in construction starts. With asking rents roughly 25 percent below the national average, the Houston market has shown considerable value in attracting users from a variety of industries including logistics, manufacturing and oilfield services.
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