Houston, TX Industrial Market Report Q4 2025

Houston’s industrial market moderated further in Q4 2025 as new speculative supply continued to weigh on fundamentals, pushing vacancy to 7.2%. Net absorption totaled roughly 2.6 million SF over the past year, down sharply from the post-pandemic peak. In addition, recent deliveries, 3.4 million SF, have outpaced demand, particularly among large, newly built logistics facilities. Even so, rents remain a bright spot: asking rates are up 4.0% year over year, supported by solid leasing activity and limited supply in infill and small-bay segments where vacancies remain well below the market average.

However, rising concessions, longer deal cycles, and softer big-box pricing signal a gradual shift toward a more balanced, increasingly tenant-friendly environment heading into 2026.

Key Findings

Tenant decision-making slowed in Q4 2025 amid tariff uncertainty and economic headwinds, with larger spaces taking longer to lease, as properties 100,000 SF or larger average 7.5 months on market.
The vacancy rate increased for the third consecutive quarter in Q4 2025, reaching roughly 7.1%–7.3%, as absorption slowed to 2.6 million SF and new speculative supply continued to enter the market.
Market rents were up 4.0% year over year in Q4 2025, supported by gains earlier in the year and strong renewal spreads, though quarterly growth slowed to roughly 1.0% as rising supply and elevated vacancy shifted leverage modestly toward tenants, particularly in large-format space.

Houston Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

Houston Demographics

Source: CoStar Group, Inc.

Unemployment Rate: 4.4%
Current Population: 7,892,334
Households: 2,865,174
Median Household Income: $83,818

Houston’s economy remains one of the nation’s stronger large-market performers. With a population of roughly 7.9 million, the fifth largest in the U.S., Houston continues to attract residents due to its young, diverse population, relative affordability, pro-business climate, and median household income of about $83,000. While energy remains a cornerstone, the region is steadily diversifying, led by healthcare, life sciences, aerospace, and biomedical research anchored by the Texas Medical Center, where projects like TMC3 are expected to generate tens of thousands of jobs and billions in economic impact.

Port Houston ranks #1 among U.S. seaports for international tonnage with 220.1M metric tons by vessel.

2024 | Source: Greater Houston Partnership

Houston Employment by Sector

Q4 2024 | Source: Greater Houston Partnership

Houston Industrial Construction

Industrial construction in Houston remained elevated in Q4 2025, bucking national trends as developers continued to build despite tighter financing conditions. With roughly 24.9 million SF under construction, among the largest pipelines in the U.S., only about 25% pre-leased, new supply has added pressure to fundamentals, contributing to a 7.2% vacancy rate. While demand remains healthy at 2.6 million SF of annual net absorption, supply-side risk is concentrated in large, speculative big-box projects, which are taking longer to lease and are expected to drive additional vacancy expansion into 2026.