Despite leasing and transaction volumes coming back significantly the past few quarters, the vacancy rate has begun to spike to highs not seen in nearly 20 years. The main cause of the spike in vacancy over the past year has been an overly active pipeline which saw more than 20 MSF brought online over the past 12 months, a lot of which was built on spec. This total was second only to Dallas-Fort Worth nationally, causing downward pressure on asking rent growth. Citywide, rents have grown 1.6% over the past year. Much of the demand continues to shift towards online retail and logistics away from the energy sector. Development remains focused around Beltway 8 and the Grand Parkway, primarily to the northwest and southeast. Expect possible project delays or a potential slowdown in groundbreakings as the market tries to adjust to a new reality. If not, landlords will face further headwinds to fill vacant space.
