Q1 2025 - Houston Industrial Market Report

HOUSTON - Rezul -- "New supply outpaced new occupancy in Q1 2025, with 3.6 million square feet delivered and 1.0 million square feet absorbed, causing vacancy to edge up slightly to 6.8%.

Activity among industrial users held steady at 8.8 million square feet, with developer confidence growing as construction rose to 16.7 million square feet, a quarter-over-quarter and year-over-year increase."

Danny Rice | President

Key Takeaways

• Deliveries up from prior quarter
• Construction level increases
• Vacancy slightly up, sublease down
• Absorption drops to record low

Houston Highlights

New supply outpaced demand during the first quarter, with 3.6M SF completed compared to 1.0M SF of net absorption. The level of construction is 16.7M SF, up 11.6% from the previous quarter and up 24.3% year over year. Leasing activity stabilized during the first quarter at 8.8M SF but is down 6.8% from the same time last year. Tesla's 1.0M SF renewal at Empire West Business Park coupled with its new lease of 616,463 SF in a proposed building in the same Northwest park represented 18.8% of the quarter's total leasing activity. The overall vacancy rate edged up 30 basis points to 6.8% from the prior quarter but is still slightly below the year-over-year figure of 7.1%. Average rents rose to $9.85 per square foot, representing a 2.2% increase from the prior quarter and year-over-year growth of 4.8%. Sublease availability decreased by 10.3% from the previous quarter and by 27.6% from the same time last year.

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Read full report: colliers.com/houstonresearch