During the final quarter of 2016, 1.9M SF of Houston’s industrial inventory was absorbed, substantially less than the 6.3M SF absorbed in the third quarter.  However, 3.9M SF of the space that was absorbed in the previous quarter was a result of one tenant, Daiken occupying a massive new facility.  Industrial leasing activity decreased between quarters, dropping from 4.3M SF to 3.2M SF.

The average vacancy rate increased 10 basis points over the quarter from 5.5% in to 5.6%.  About 70% of the 2.3M SF of new space delivered in Q4 2016 was pre-leased and 78% of the 5.2M SF currently under construction is pre-leased.  More than 2.4M SF of the 5.2M SF currently under construction is located in the East-Southeast Far submarket where the Houston’s Ship Channel and the Port of Houston are located.

The average citywide quoted industrial rental rate increased 3.3% on a quarterly basis from $6.87 per SF NNN to $7.10 per SF NNN.

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