HOUSTON – (By Kyle Hagerty for Realty News Report) – Houston’s industrial vacancy may finally be catching up to the blazing pace of construction in recent quarters.
Overall vacancy is at 6.5%, up from this time last year at 5.7%, thanks to more than 6.3 million square feet of vacant space being added to the market. That’s half the space delivered in the last year vacant. Vacancy is likely to continue to rise, with roughly 75% of the 16.9 million square feet of industrial space under construction is unspoken for, according to research from NAI Partners.
With oil markets rebounding this time last year, many thought the activity would boost an already hot industrial sector, but global energy developments have prevented the higher oil prices Houston needs. The closing spot price for a barrel of West Texas Intermediate averaged $55.17 per barrel in the last week of August 2019, down 20.7% from the same period last year, according to the U.S. Energy Information Administration. The WTI price was close to $56 a barrel Friday morning.
Talks of national economic concern on the horizon means the wave of consumer distribution centers and activity from national brands expanding operations in Houston that have fueled the region’s hot industrial sector may soon falter. If that happens, activity from Houston’s energy industry will need to increase to keep pace with development.
For now, there’s no cause for concern, Houston’s industrial real estate sector has been the belle of the ball locally, but the continued pace of development is something to keep an eye on.