The market for warehouse space is selectively tight. Banks are lending but not as liberally, making speculative construction difficult despite improved occupancy percentages and higher rates.
Mulit-tenant options near the container terminal (far east Houston) are good, but limited for tenants seeking less than 50,000 SF. Most landlords are holding out for the “big” tenant. Distribution spaces less than 40,000 SF are well leased across the city. Second generation dock spaces in northwest Houston are particularly limited. The same thing can be said for near SW market.
Economical free-standing buildings with lower building-to-land coverage ratios and good quality stabilization are in high demand. Rates on new freestanding buildings are easily 45% more than new multi-tenant options with similar office percentages.
What does this mean? Landlords are in a position to push rates for selective sizes and quality for the first time in several years. “Sub-par” property is still sub-par: take a paying tenant. Tenants in “average to above-average property” in good submarkets don’t get greedy and think you’re going to get a Spring 2009 rate: it aint’ happenin’.