The result? "What we have here is a situation where supply is outweighed by demand," observes Justin Bennett, DCT Industrial's regional vice president. "There's just not a lot of available class A product today in the market."

As a result, there is competition over the space that comes to market – and very quick renewals. "Deals are getting done a lot faster," observes Stream Realty associate Jeremy Lumbreras. "Deals that would normally take three to four months to complete are now being done in 30 to 45 days. There's so much competition on the market for quality space, it's flying off the shelves."

It's also led to interested investors flocking into the area. "There's been a huge investment appetite with regard to new players coming into Houston," Bennett notes.

This has led to increased pricing and values – when buyers can find the assets, that is. "Institutional buyers have been trying to acquire here, but there isn't a whole lot of product for sale," Rusty Tamlyn, senior managing director with HFF observes. Tamlyn and his team did manage to sell several million square feet around the region this past year. "The good news, is we had the product to sell. The bad news is we don't see much coming on the market next year," Tamyln remarks.

What about speculative development? The experts acknowledge that, based on the statistics – especially single-digit vacancies -- it's somewhat surprising that developers haven't been descending on Houston to build, baby build, especially given the lack of zoning laws here. There is development – it's just not being overdone.

"The development is concentrated in particular areas, and in most place where the developers already own the property or has it under contract," Talhelm says. There are many projects going north, especially on the far west side, and in the north and northwest submarkets. But Tamlyn points out that, even with space scheduled to come online, the area is still short. "We have some 3.5 million square feet under development," he comments. "We've had 5 million square feet of absorption in the past year. Space that is being built is being leased quickly."

Furthermore, much of what's being built isn't the massive, big-box, multitenant product. "The bulk of the new construction in the market is being dominated by single-tenant, crane-ready buildings ranging from 20,000 square feet to 40,000 square feet," Talheim remarks. "There are 30 of those under construction right now." Stream's Lumbreras says he's also seeing a lot of leasing activity in the 10,000-square-foot to 15,000-square-foot range. "That size is a good starting point for people testing the market," he explains.

Bennett and Tamlyn both predict more development in 2013, though it's questionable whether it'll be speculative, build-to-suit or projects that are substantially preleased. Even with the demand for space in the industrial sector, "speculative development doesn't necessarily have the cash flow," Tamlyn says. "Developers will need a lot of equity for that." Still, "those who have land positions will likely build on them, if they're well capitalized companies," Bennett says. "But everyone will be cautious with respect to overbuilding and will carefully monitor what everyone else is doing in the market."

Talhelm agrees that spec development will be more on the conservative side. "Even though vacancy rates are historically low, the development community is moving cautiously," he points out. "They're operating in a manner to prevent overbuilding from taking place."

This isn't necessarily bad news, though tenants might think so. The continued lack of new product will continue to lead to an uptick in rents and scarcity of space on the tenant side. But it's a better scenario than the wild overbuilding of 30 years ago.

"Houston, as a real estate community, is more conservative, having gone through the ills of the 1980s," Bennett says. "There's such a low barrier to entry, especially on the industrial side, there's the ability to flood the market with industrial."

But this time around, developers are being more cautious and careful, and are building to capture demand, a trend that will continue into next year.