HOUSTON—Multiple companies are competing for the same properties and the vacancy rate in the North Houston market is expected to decrease in 2018. Tenants looking to get a great deal should take advantage now while they still can, says Robert McGee, principal at Lee & Associates–Houston. In this exclusive, McGee added further insights on the industrial market, focusing on North Houston where the vacancy rate for industrial space once sat around 10%.
“The vacancy rate for Houston's industrial real estate market was approximately 5% entering 2018; however, if you look a little closer, not every submarket performed as well as others,” McGee tells GlobeSt.com. “For a while, North Houston had an abundance of vacancy in distribution buildings. Tenants were able to negotiate attractive concessions and lock in lower rental rates.”
However, in the last two quarters of 2017, more than 1 million square feet was taken down in new leases. During the first quarter, McLane Global expanded its lease with Hillwood by 124,000 square feet. Lee & Associates also leased 112,000 square feet at Volta Transport Center to Flexo-Bag Converters.
“We had two other proposals out for the same space at the time the lease was signed,” McGee continues. “It's a nice change of pace for North Houston to have properties with multiple deals competing for the same space.”
It appears that demand for space has come back for now and for the first time in approximately three years, developers are poised to take advantage of the lack of inventory in the near future, McGee observes.
“With this market tightening, I feel rents will finally start to increase over 2018 and we will finally see new distribution buildings breaking ground,” he surmises. “It's great to see this finally happening. North Houston is an attractive submarket for companies because of its proximity to a large international airport and desirable suburbs such as The Woodlands, Kingwood and Conroe.”
Additional perks include access to Beltway 8, Interstate 69, Interstate 45, the Hardy Toll Road and now the Grand Parkway, McGee points out.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
