Houston, TX Industrial Market Report Q3 2025

Houston’s industrial market softened slightly in Q3 2025 as vacancies continued their upward trend and rent growth moderated. The overall vacancy rate rose to 7.4%, up from 7.3% in Q2 and 6.4% a year ago, reflecting the continued imbalance between new supply and demand. Compared with the prior quarter, net absorption declined by roughly 12%, while new deliveries increased by nearly 18%, widening the vacancy gap.

Absorption rates remain about 15% below 2017–2019 levels, suggesting it could take several years for the bulk distribution sector to return to balance. Despite this, absorption stayed positive, with 10.9 million SF taken up over the past year. Asking rents averaged $9.33/SF, up 3.2% year-over-year but with minimal quarterly growth of 0.3%, as speculative deliveries gave tenants more leverage. The slower quarter-to-quarter rent movement contrasts with the 0.7% gain seen in Q2, underscoring a cooling trend in pricing momentum.

Key Findings

Panelmatic and Inventec signed leases over 500,000 SF near I-45 and I-10, and in September, Eli Lilly revealed plans for a $6.5 billion manufacturing facility in Generation Park—the largest in the U.S.
Vacancy reached 7.4% as new supply entered the market and absorption moderated, with spaces now taking an average of 10 months to lease. This reflects a more measured pace compared to just 2.8 months two years ago.
The market totals 838 million SF across 20,582 buildings, with 21.1 million SF under construction, 75% of which remains available, pushing the availability rate to 9.7% as developers continue delivering large speculative projects.

Houston Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

Houston Demographics

Source: CoStar Group, Inc.

Unemployment Rate: 4.4%
Current Population: 7,883,927
Households: 2,887,007
Median Household Income: $81,844

Houston’s industrial market remained active and resilient in Q3 2025. The region’s inventory reached 838 million square feet across 20,582 buildings, supported by a robust development pipeline with 21.1 million square feet under construction. Leasing demand stayed strong, reflected in 10.9 million square feet of net absorption during the quarter. Availability measured 83.2 million square feet, resulting in a 9.7% availability rate and a 7.4% vacancy rate. Additionally, investor activity remained steady, with 7.2% of the total market trading hands over the period, underscoring continued confidence in Houston’s industrial fundamentals.

Top U.S. Metros for Job Growth in Renewable Energy

Source: Greater Houston Partnership

Port Houston Economic Value

Source: Port Houston Statistics

Statewide: $439 Billion
Nationwide: $906 Billion

Houston Industrial Construction

Construction activity in Houston’s industrial market remained strong in Q3 2025, with 21.1 million SF underway, one of the largest pipelines in the nation. Despite financing challenges, speculative development continues, with only about a quarter of projects pre-leased. Much of the new supply is concentrated in large-format facilities, which are taking longer to lease, while smaller properties are moving more quickly. Availability for buildings 250,000 SF or larger sits near 50%, well above the market average of 9.7%, as a surge of big-box projects hit the market. Construction is focused in suburban areas with access to labor and transit infrastructure, and although total deliveries are expected to dip to a seven-year low this year, rising groundbreakings point to increased activity in 2026 and beyond.