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Houston - Industrial Net Absorption and Vacancy Rates Q4 2014

Houston – Industrial Net Absorption and Vacancy Rates Q4 2014

In spite of recent concerns caused by the benchmark U.S. oil prices dropping below $50 a barrel for the first time in five and a half years and Houston’s intricate connection to the energy industry, the city’s real estate market continues to perform well.

Recent research data from CBRE shows that the industrial market in Houston has been booming. Q4 2014 marked the 15th consecutive quarter of positive absorption at 2.2 million square feet, topping the year off with a record absorption of 8.1 million square feet.

CBRE designated Houston’s excellent transportation infrastructure as one of the main factors leading to the city’s excellent performance in the industrial sector.  Thanks to Houston’s position along the Grand Parkway and the route of the proposed I-69 NAFTA Superhighway, and the city’s easy access to other major thoroughfares, in 2014 developers focused extensively on creating large industrial parks. As such, over 1.7 million square feet of new industrial space were delivered in Q4 2014 and more than 8.4 million square feet are still underway.

The large amount of industrial space delivered or still under development did not have a negative impact on Houston’s vacancy rates. On the contrary, the average industrial vacancy rate dropped to 5.0 percent in the last quarter, while rental rates remained steady at a gross average of $0.67 per square foot throughout Q4.

Chart courtesy of CBRE