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Industrial Pendulum Will Start Swinging This Year

HOUSTON-Industrial building owners should have better days ahead as the market slowly begins to edge their way, most likely this year. Grubb & Ellis forecasts lower vacancies and higher rents are coming in 12 to 18 months.

By Jennifer Brenner Andrade | Updated on January 14, 2004

HOUSTON-Empowered by low interest rates and rising vacancies, Houston’s industrial tenants had a lot of negotiating power in 2003, but Grubb & Ellis Co. research shows the pendulum should slowly begin to swing in the direction of building owners in 12 to 18 months.

Robert Kramp, director of client services in Houston for Grubb & Ellis, tells GlobeSt.com that the local industrial market will “gain momentum during the early months of 2004 with vacancy embarking on a slow descent and rents stabilizing by the end of 2004.” The predicted market shift is based on an upswing in economic indicators such as inventories, durable goods orders, production, wholesale trade and retail sales. “The orientation is beginning to lean more toward landlords in lease negotiations,” he says.

Houston closed out 2003 with an 8.5% industrial vacancy. Kramp expects it could dip to 8% or slightly less this year.

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