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Supply and Demand Explain Industrial Market More Than Oil

HOUSTON—With the three major industrial submarkets differing so greatly in supply and demand, the availability of various sizes of buildings also differs.

By Lisa Brown | lisabrown | Updated on March 17, 2016

NAI The Southeast corridor appears to be under-supplied with reasonably strong demand.

HOUSTON—In commercial real estate, vacancy can greatly increase (or decrease) depending on the net absorption of new deliveries that add to existing vacant or occupied stock. Also, deliveries year over year under low net absorption can lead to increases in vacancy.

The Northwest industrial market has had low vacancy since 2006, with only a modest uptick in 2016 with the large deliveries in 2015, says Houston-based NAI Partners. From 2005 to 2008, the Northwest corridor had a modest surge in new deliveries each year, which was balanced by annual net absorption that matched annual deliveries. This kept vacancy at 4 to 6%, the brokerage indicates.

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