Q225 Houston Industrial Market Report

Key Findings

Houston’s industrial vacancy rate held at a historically low 7.0%, the lowest in almost a decade, despite a large speculative construction wave. Tenants absorbed 13.8M square feet over the past 12 months, keeping demand resilient even as new deliveries slowed sharply compared to prior years.
Annual rent growth came in at 1.8%, which is a significant cooling from pandemic highs but still above national averages. Big-box spaces experienced the most competition and slowed rates, while small-bay spaces under 50,000 square feet remained tight with limited new supply, pushing their rates higher.
While Houston added substantial new product, roughly 13.0 million square feet in the past year, leasing velocity stayed strong. However, new deliveries moving further through 2025 are projected to drop to around 16 million square feet, creating potential for long-term rent and occupancy stabilization as the supply-demand imbalance is corrected.

By the Numbers

As of July 1, 2025 | Source: CoStar Group, Inc.

	5K-50K SQFT	50K-100K SQFT	5K+ ALL TENANT
Inventory SF	165,000,000	79,900,000	834,000,000
Under Construction SF	803,000	1,100,000	17,700,000
Net Absorption	1,200,000	-50,500	14,800,000
Vacancy Rate	4.4%	3.2%	7.0%
Availability Rate	6.0%	6.1%	9.2%
Available SF	10,000,000	4,900,000	78,600,000
Market Size Buildings	10,530	1,161	20,483
% of Market Sold	6.1%	6.1%	6.4%

Houston Demographics

Unemployment Rate: 4.5%
Current Population: 7,855,187
Households: 2,875,618
Median Household Income: $81,780 | Source: CoStar Group, Inc.

Houston continues to rank among the top U.S. metros for job growth, with nearly 300,000 more people employed today than before the pandemic—one of the largest increases in the nation. The greater Houston area, home to approximately 7.7 million people, is the fifth-largest metro in the U.S. Its young demographic, affordable cost of living, warm climate, low tax burden, pro-business policies, diverse culture, and welcoming atmosphere continue to draw new residents. Over the past decade, the region’s population has increased by 19.0%, far surpassing the national average of 6.5%.

Market Performance

Houston’s vacancy rate has remained virtually stable over the past year as new deliveries have slowed considerably, while tenant demand continues to be robust. Developers have completed approximately 13.0 million square feet of new industrial space in the past 12 months, during which the market absorbed around 13.8 million square feet. Industrial demand in Houston has been more resilient than most other U.S. markets in recent quarters.

Over the last year, Houston ranked among the top three U.S. metros for 12-month absorption, trailing only Dallas and Savannah. The local tenant base continues to grow despite a softer national outlook. Annual net absorption remains roughly 15% higher than the 2017–2019 average, a stark contrast to the national trend, which is hovering near its lowest level since 2011.