Q1 2025 Houston Industrial Market Report

Houston Key Findings

Over the last three years, Houston has added over 380,000 new residents, one of the greatest increases in the country.
The recent supply wave has slowed annual rent growth to 1.5%, the lowest level since 2016. However, major supply-side relief is on the way, with new deliveries expected to approximately 14 million SF in 2025, the lowest level since 2017.
Houston is one of the few major markets that has seen a decline in vacancy. Coming down from a peak of 8.0% in Q2 2024, the rate currently stands at 6.9%.

By the Numbers

As of March 19, 2025 | Source: CoStar Group

Q1 2025	5K-50K SQFT	50K-100K SQFT	5K+ SQFT/ALL TENANT
Inventory	165,000,000	78,500,000	829,000,000
Under Construction SF	609,000	862,000	17,200,000
Net Absorption SF	120,000	300,000	17,500,000
Vacancy Rate	4.3%	3.1%	6.8%
Availability Rate	6.0%	5.9%	9.5%
Available SF	10,000,000	4,700,000	80,700,000
Market Size-Buildings	10,488	1,142	20,329
% of Market Sold	5.8%	5.7%	5.9%

2024	5K-50K SQFT	50K-100K SQFT	5K+ SQFT/ALL TENANT
Inventory	154,000,000	75,100,000	763,000,00
Under Construction SF	758,000	649,000	13,700,000
Net Absorption SF	199,000	176,000	18,900,000
Vacancy Rate	4.4%	3.0%	6.5%
Availability Rate	6.0%	6.0%	9.1%
Available SF	9,300,000	4,500,000	70,600,000
Market Size-Buildings	9,700	1,092	17,896
% of Market Sold	5.1%	4.8%	5.3%

Houston Demographics

Unemployment Rate: 4.6%
Current Population: 7,659,345
Households: 2,803,105
Median Household Income: $80,269

Houston is one of the nation’s best-performing markets for job growth. The labor market today employs almost 300,000 more people than it did before the pandemic, one of the country’s largest gains. The Houston metro has a population of around 7.7 million, making it the fifth-largest in the nation. Its young population, affordability, nice climate, low taxes, generally business-friendly environment, diversity, and culture continue to attract new residents.

Market Performance

The Houston industrial market has struck a turnaround as of early 2025. The supply wave is nearly over, demand remains above historical levels, and vacancies are stabilizing. However, it may take a few years for supply and demand to find a balance, particularly in the bulk distribution sector. Since 2021, the stock of logistics properties measuring 100,000 square feet or more has increased by 20%. Today, 17.1 million SF is still under construction, with 85% available for lease, the majority of which is in this segment. As occupiers in transportation and manufacturing continue to expand, leasing volumes remain roughly 40% higher than in 2017-2019. Last year, tenants such as Integra Mission Critical and Solar Plus leased about 2 million square feet at newly developed industrial facilities along the North Hardy Toll Road, a high-demand location due to its proximity to George Bush Intercontinental Airport.

Houston’s tenant demand is undeniably strong. While absorption rates have declined from their peak during the pandemic, they remain significantly higher than in most other major US markets. Over time, Houston’s distinctive demand drivers remain strong and supportive of industrial demand, which includes a major port, one of the top metros for population growth, as well as a massive manufacturing sector and petrochemical industry.

Performance by Industrial Type

Source: CoStar Group

	Vacancy Rate	Market Asking Rent Per SF	Availability Rate
Logistics	7.6%	$8.61	10.1%
Specialized	2.4%	$10.48	5.1%
Flex	8.8%	$13.24	10.0%

Construction

The Houston industrial market is nearing the end of a record development cycle. New supply declined in 2024, following four years of record new deliveries between 2020 and 2023, and is expected to slow even further in 2025. Despite the recent decrease, a relief in supply will aid in the reignition of the current 1.5% rent growth rate. Supply-side pressure is more evident in big box space, which has accounted for the majority of recent deliveries. The overall quantity of vacant space among buildings 100,000 SF or greater has reached 34 million SF today. Another 10 million square feet of unleased industrial space in similar-sized properties is being developed.