INDUSTRIAL RENTAL RATES ON THE RISE
Over the past 12 months, the Houston Industrial market has seen a 9% increase in Base Rental rates.
Over the past 12 months, the Houston Industrial market has seen a 9% increase in Base Rental rates. This is a newer phenomenon for the city as we have previously seen stagnant or minor rent increases year over year. The Houston Metro Area has historically had a large amount of sites available for industrial development compared to other major metro markets. Cities like Los Angeles or New Jersey have consistently seen rent increases year over year due to the finite availability of industrial sites. In Houston, we are starting to see suitable sites with good access become harder to find.
With Houston leading the country in Industrial demand, it's no surprise we are starting to experience rent increases on par with other markets. However, this is also driven by strong headwinds to deliver more supply with higher land prices, inflated construction costs, and a rise in the cost of capital. As the construction pipeline in Houston slows down due to higher costs to deliver buildings, we expect to continue to see another 5-10% rent increase as industrial demand remains strong.
- Peyton Easley, CCIM