0 Fall 2016

  • by Greg Egan
  • 10-17-2016

The industrial market is “hangin’ in there”. While it is harder for landlords to push lease rates, it is do-able in certain product types in certain submarkets. The east side and southeast sides of town remain tight in all product categories. The north and northwest sides are experiencing a slow-down in demand for larger distribution spaces (those in excess of 30,000 SF) and free standing buildings. 

Properties between downtown and the Beltway remain in high demand as the residential developers absorb dirt once occupied by warehouses/shops and tax assessments simply drive industrial users away from the urban core. Other than in free standing metal buildings in north/northwest Houston where asking rates are falling, lease rates seem to have stabilized. In this market, short term deals are getting done and eye-popping rate increases are becoming less likely.

On the purchase side, asset valuations remain overheated. Nonetheless, low interest rates combined with historically high rental rates continue to drive interest in ownership for a lot of locally owned/operated businesses. It simply may be time to accept that the days of $20 - $30 per SF industrial properties are over.