Demand for industrial real estate in Houston is high, and it continues to rise as we move further into the new year. 4.1MSF of new industrial inventory was added in the third quarter of 2019, and the Bayou City is becoming a center of industrial activity, driven by population growth and demand for distribution centers and manufacturing facilities.
E-commerce growth is a factor in recent industrial expansion, with facilities accommodating for high customer demand and the need for more inventory. Amazon recently expanded its operations at West Ten Business Park along I-10, while e-commerce construction is prevalent near George Bush Intercontinental Airport and the southeast submarket.
E-commerce is not the sole reason for the recent industrial growth, however. Distribution construction is also on the rise, with Coca-Cola recently moving to their new $250 million manufacturing plant on the north side, and Costco and Home Depot calling massive new distribution centers in Houston home.
The northwest submarket of Houston is seeing the most industrial construction (5.5MSF underway in the third quarter), and the Bayou City’s robust pipeline is posting absorption numbers in the black. This has led to concern among investors that the increased demand for industrial space in Houston could lead to an oversupply of space – but as more modern, state-of-the-art facilities are needed and market fundamentals remain healthy, strong interest for Houston industrial assets should remain steady.
While companies work to accommodate national demand, the continued construction and leasing of industrial space is positioning Houston on the national stage as a distribution hub, setting the pace for the first quarter of 2020 and beyond.