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Demand for industrial and warehouse space in Houston has fluctuated over the past several years. The vacancy rate fell to 5.0 percent in Q4/22, the lowest level recorded during the five-year period shown, amid strong absorption and elevated construction activity. In Q2/26, the vacancy rate edged down from 7.4 percent to 7.3 percent, marking its first quarterly decline since Q4/24. Although the improvement was modest, it coincided with stronger net absorption during the quarter.

 

Net absorption in Houston’s industrial market increased from 4.2 million square feet in Q1/26 to 6.9 million square feet in Q2/26, the strongest quarterly total since Q3/24. The increase indicates firmer leasing demand during the quarter, although elevated availability continues to provide tenants with ample space options.

 

At the end of Q2/26, Houston had 89.4 million square feet of industrial and warehouse space listed as available, up approximately 4.0 million square feet from 85.4 million square feet in Q1/26. This was the highest level in the five-year period shown. Available space includes vacant, sublet, and soon-to-be-vacant properties, as well as occupied space currently being marketed for lease. The increase suggests that market conditions remain competitive despite the modest decline in the vacancy rate.

 

Industrial construction continued to increase in Q2/26, with 27.1 million square feet underway, up from 26.1 million square feet in Q1/26. The pipeline has expanded for four consecutive quarters but remains below the five-year high of 36.3 million square feet recorded in Q4/22.

 

Average industrial triple-net asking rent increased to $10.57 per square foot in Q2/26, up from $10.40 in Q1/26 and $10.23 in Q2/25. Under NNN lease terms, tenants are generally responsible for expenses such as property taxes, maintenance, utilities, and security. Average asking rents have risen approximately 37 percent over the past five years, although the pace of annual rent growth has moderated.

 

Prepared by Greater Houston Partnership Research

Leta Wauson
Research Director
Greater Houston Partnership
lwauson@houston.org