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Sixty-Six Warehouses Under Construction in Houston, CBRE Reports

Robert Kramp

Robert Kramp

HOUSTON – Sixty-six warehouses and industrial buildings are under construction in the Houston area, the most robust construction pace in years with 11.2 million square feet being built according to CBRE.

Robert Kramp, CBRE’s director of research and analysis, says Houston has become a major distribution hub that no longer relies as heavily on Dallas, the traditional warehouse and distribution center for the region.

“Houston is coming into its own as a logistics and supply hub,” Kramp says.

Houston’s construction surge comes in conjunction with growth at Houston ports, petrochemical industries, and third party logistics operators.

During the second quarter, construction began on 17 projects totaling 954,000 SF, the CBRE firm reported.

The 4 million SF Daikin factory and distribution facility off of Highway 290 and the Grand Parkway, is a big chunk of the industrial construction activity. Daikin, an HVAC manufacturer, is expected to complete its facility in the third quarter. It is the largest tilt-wall construction project in the world.

Despite the tremendous addition of new buildings, the Houston market has one of the lowest industrial vacancy rates in the nation. CBRE reported second quarter vacancy of 95 percent with 1.8 million SF of absorption.

Rental rates remained virtually unchanged in most submarkets, says Kramp.

The softest segment of the Houston industrial market is the smaller crane-served manufacturing buildings in the 25,000-SF range. Many of these building were devoted to oilfield service operations and that has declined as the rig count withered and oil prices fell.

July 8, 2016

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