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Houston's Industrial Market Ends 2018 on a Hot Note

The city ended the year with a 5 percent vacancy rate, the lowest rate since the second quarter of 2016.

The numbers are in: Houston's industrial market ended 2018 on a red-hot note.

After a year defined by deals of all sizes in the e-commerce, logistics and petrochemical industries, Houston's industrial market ended 2018 with a 5 percent vacancy rate, which is lower than it's been since the second quarter of 2016, according to a fourth-quarter report from CBRE.

And 2018 marked a record for industrial projects breaking ground in the Bayou City. Roughly 16.3 million square feet in new industrial construction broke ground in Houston in 2018, which is 2.7 million square feet higher than the previous construction record set in 2014, per the report. The average size of an industrial property being built right now is 233,100 square feet, per the CBRE report.

And in what signals developers' confidence in the north Houston submarket, more than one-third of the industrial properties under construction are being built in the north submarket, per the report. Approximately 5.1 million square feet of industrial space is underway in north Houston. A total of 14 million square feet in industrial properties is under construction throughout the city.

The largest industrial lease signed in Houston in the fourth quarter was for Kentucky-based Valvoline, an automotive lubricant distributor. Valvoline inked a 472,564-square-foot lease at Port Crossing Commerce Center in southwest Houston in the fourth quarter, according to CBRE.

On the investment side, some of the largest industrial deals in the fourth quarter included Miami-based Southern Glazer's Wine and Spirits buying a 673,785-square-foot distribution facility in Katy from Atlanta-based Oakmont Industrial Group, as well as a private buyer purchasing a 447,605-square-foot manufacturing facility in southeast Houston at Greens Port Industrial Park from Houston-based Hines. The facility is fully leased to Houston-based AFGlobal Corp.

Another large industrial property that traded hands in the fourth quarter was Switzerland-based Zurich Insurance Group Ltd. buying a 554,536-square-foot property in southwest Houston from Seefried Industrial Properties for an undisclosed sum, per the CBRE report. The facility was built for Minnesota-based electronics retailer Best Buy (NYSE: BBY) at 636 Highway 90A at the corner of Cravens Road and Highway 90 in Missouri City in Fort Bend County, HBJ previously reported.

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