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NAI Partners: Houston’s Crane-Served Manufacturing Buildings Suffering Because of Oil Decline

HOUSTON – Demand for crane-served manufacturing buildings has declined sharply in Houston because of the drop in oil prices and drilling activity, according to a report by NAI Partners.

Although other sectors of Houston’s industrial market are strong, the crane-served market has 1.4 million SF of sublease space available.

Year-to-date the crane-served market has 1 million SF of negative absorption, NAI Partners reports, and the vacancy rate is rising. Some 355,000 SF of that building type is under construction. The weakness is most acute for buildings less than 30,000 SF.

On average, vacancy has risen to 10.5 percent for all crane-served buildings, but ranges from 15.1 percent for crane-served buildings less than 30,000 SF in size to 7.6 percent for buildings greater than 100,000 SF, NAI reported.

Many of the smaller (under 30,000 SF) crane-served buildings in Texas are used for manufacturing work related to oilfield work. This week’s U.S. oil rig count from Baker Hughes showed 414 rigs were currently in use. By comparison, at the peak in mid-2014 the rig count was over 1,600.

Meanwhile, the Dallas Branch of the Federal Reserve Bank reported that Texas factory activity increased in August, but broader business conditions were still fairly pessimistic.

Sept. 10, 2016 Realty News Report Copyright 2016

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