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Quarterly Update: Industrial Market

Q1 '24, Latest Data
Published on 4/15/24

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Estimated Reading Time: 2 minutes.

The demand for industrial/warehouse space in Houston continues to slip. In Q4/22, the vacancy rate was at a recent low of 5.2 percent but has since increased to 7.4 percent in Q1/24.

Demand for space peaked at 18.1 million square feet in Q3/21.  In Q1/24, absorption stood at 2.5 million square feet, reminiscent of pre-pandemic levels. 

Houston had 74.2 million square feet of industrial/warehouse space (direct and sublet) available at the end of Q1/24. This includes vacant, occupied yet available, available for sublease, or available at a future date. 

Higher interest rates, tougher lending standards, and weaker net absorption have hampered building activity. As of Q1/24, Houston had 15.8 million square feet underway compared to 37.3 million at the Q4/22 peak.

Rents continue to rise, however. The average industrial rent was $9.20/sq. ft./year in Q1/24. That’s up from $8.77 in Q1/23 and $8.07 in Q1/22. The rates quoted are triple net (NNN) where the tenant is responsible for all expenses associated with their share of building occupancy, i.e., taxes, maintenance, utilities, security, etc. As the level of vacancies continues to rise, rents will plateau and may slip from their current record highs.

Prepared by Greater Houston Partnership Research

Patrick Jankowski, CERP
Chief Economist 
Senior Vice President, Research

Leta Wauson
Research Director







Key Economic Indicators Real Estate

Houston industrial vacancy rate ticked up to 7.4% as of Q1 24.

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