Houston, TX – Avison Young today released its first quarter 2025 Houston industrial market report. Bolstered by solid fundamentals, the Houston industrial market continues to demonstrate strength, adapting to evolving consumer demands. While new construction has moderated since the end of 2023, the market's enduring resilience is underpinned by steady industrial job growth and strong activity at the Port of Houston. This stability is further reinforced by a diverse tenant base, encompassing e-commerce, logistics, healthcare, and industrial equipment/machinery, creating a solid and stable foundation for sustained future growth.

In the first quarter of 2025, 3.0 million square feet (msf) of new industrial product was delivered, pushing the total vacancy rate to 7% — a 24-basis point increase from the fourth quarter of 2024. The construction pipeline remains steady at 13 msf, with 8.9% already pre-leased. 2.3 msf broke ground in Q1 2025, and an additional 11.6 msf is projected for delivery by year-end.

 It is also important to highlight that over the past year, Houston's industrial development pipeline has seen a shift in its composition. The proportion of projects dedicated to build-to-suit product has decreased from 37% to 19%. This decrease is primarily due to the normalization of industrial space demand, leading to fewer companies constructing facilities with specialized features.

According to Drew Coupe, Principal and industrial tenant representation specialist with Avison Young, “Despite construction activity slightly outpacing demand, the market is seeing a healthy absorption of new inventory, evidenced by consistent lease-up times.”

In the first quarter of 2025, Houston’s industrial leasing activity reached 6.4 msf, marking the lowest quarterly volume since the 6.1 msf recorded in the third quarter of 2020. Compared to historical averages, this figure represents a 34% decrease from the post-pandemic average and is 8% below pre-pandemic levels. Despite this decrease, the return to volumes comparable to those seen before the pandemic suggests a stabilization and normalization of the Houston industrial market.