Houston, TX – Avison Young today released its First Quarter 2024 Houston Industrial Market Report. The Houston industrial market showed continued resilience in Q1 2024, with net absorption surpassing 3.2 million square feet (msf). While demand has moderated from its post pandemic peak, it remains healthy and sits slightly above the pre pandemic average (2016-2019).

Construction activity is currently at its lowest point since 2016, with just 985,000 sf breaking ground in Q1 2024 compared to the pre-pandemic average of 4.2 msf per quarter. This dramatic slowdown, coupled with completions exceeding starts, has reduced the development pipeline. However, this decline signals a healthier market in the long-run, as the pace of construction is returning to more sustainable levels.
“After the industrial construction boom in 2022, we are now seeing the pipeline stabilize to adjust to meet long-term demand,” said Drew Coupe, Principal and industrial tenant representation specialist with Avison Young.

While construction activity has slowed, a substantial 5.6 msf of new product has come online, adding to the record-breaking volume delivered in 2023. This influx has pushed vacancy rates up, 190 basis points higher year-over-year and 30 basis points above the prior quarter. However, the new space that has been delivered since the beginning of 2023 is still in lease-up. While market activity has normalized, occupier demand remains robust, with expectations that occupancy will eventually catch up, albeit at a slower pace.