Talk to most people around the country about Houston real estate and the first thing they say is how bad the market is. The growing inventory of office space in Space City has been well documented and widely reported. But other sectors in the Houston commercial real estate market, particularly retail and industrial, are healthy, even robust, in the nation’s fourth largest city. To find out more about the industrial sector, Realty News Report talked to Darryl Noon, senior vice president at Transwestern. Darryl began his commercial real estate career in Houston in 1988 at Weingarten Realty Investors. He joined Transwestern’s Houston industrial group nine years later. At Transwestern, Darryl has successfully completed over 800 transactions totaling over 20 million square feet.
Realty News Report: The Houston industrial market has been a bright spot during the downturn of the local economy and declining oil prices. What is the state of the industrial market in Houston today?
Darryl Noon: Activity is still good. I have had one of my busiest summers since I started in the business.
Realty News Report: Transwestern reports Houston’s overall industrial vacancy rate is now 6.1 percent, up from about 4.5 percent in the second quarter of last year. Why has vacancy increased?
Darryl Noon: New construction products have delivered that have added to the vacancy.
Realty News Report: Are you worried about this increase?
Darryl Noon: Not really. We are still seeing positive absorption across the market and anticipate this trend to continue.
Realty News Report: The near southeast side, around the Port of Houston area, has a microscopic 1.7 percent vacancy rate. Why is that submarket so strong?
Darryl Noon: The expansion and development of new petrochemical plants along the ship channel and along the coast as well as the expansion of the Panama Canal have created a need for additional warehouse
Realty News Report: Some people held hope that the Panama Canal expansion would inject some life into the Houston economy. It looks like the Panama Canal effect is going to be a disappointment for Houston, doesn’t it?
Darryl Noon: I disagree. We will not get all the business coming through but we will definitely enjoy an increased amount of activity.
Realty News Report: Lincoln Property Co. recently purchased a 500,000 SF project near Ellington Airport, not far from NASA. Do you foresee a lot of future growth arising from space travel?
Darryl Noon: I personally do not think it will have a huge impact on the industrial market.
Realty News Report: What do you think of the south Houston market, around Beltway 8 and Highway 90?
Darryl Noon: There has been a lot of industrial construction around there lately. Both markets have been very active with new development and leasing. The Texas Medical Center as well as the explosive growth of Pearland and Fort Bend County have been steady drivers.
Realty News Report: What’s your forecast for 2017?
Darryl Noon: I think we will continue to have positive absorption in all submarkets. Vacancy rates will stabilize and start dropping as the new construction vacancy gets leased up.
Sept. 10, 2016 Realty News Report Copyright 2016
Realty News Report is a Texas-based publication edited by Ralph Bivins.