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Avison Young releases Fourth Quarter 2022 Industrial Market Report for Houston
January 11, 2023
Developers keep building at a record pace to satisfy demand
Houston, TX – Avison Young today released its Fourth Quarter 2022 Industrial Market Report for Houston. The industrial market ended the year with solid absorption gains totaling 28 million square feet (msf), slightly below 2021’s record absorption pace. Developers continued expanding their product offerings with record-level construction even with slower levels of absorption and leasing activity in 2022.
“The fundamentals in the Houston industrial market are the best I’ve ever seen,” said Rand Stephens, an Avison Young Principal and industrial market specialist. “That said, the rise in interest rates and the persistently high costs of construction will dampen new construction starts in 2023. However, with 31.3 msf under construction, a pause in development may be just what the market needs to maintain strong fundamentals into 2024 and beyond.”
Rising construction costs, inflation and low vacancy rates have been driving up rental rates across the market. Overall asking rents rose by 1.3% during the fourth quarter and have increased by 12.9% year-over-year.
“Over the past 24 months tenant demand has been the strongest we have ever experienced in Houston and we anticipate that demand to remain throughout 2023. This in turn will keep absorption at record levels,” said Drew Coupe, an Avison Young Principal and industrial tenant representation specialist.