Industrial market shows signs of stabilization amid strong leasing activity

Houston, TX – Avison Young, a global real estate advisory firm, today released its Third Quarter 2025 Industrial Market Report for Houston. The industrial market is transitioning toward normalization, with steady leasing activity and strategic development continuing to shape the city’s industrial landscape.

Houston recorded 1.8 million square feet (msf) of positive net absorption in the third quarter of 2025, bringing the year-to-date total to 6.2 msf. While absorption slowed compared to previous quarters, leasing activity remains robust—28.9% above pre-pandemic levels and only 14.8% below post-pandemic highs. This reflects sustained demand across key sectors including logistics, food and beverage, and technology, which together accounted for 68% of signed leases.

Development activity remains active, with 5.5 msf delivered in the third quarter—one of the highest volumes since the second half of 2024. Currently, 13.7 msf is under construction, with 4.0 msf expected to deliver by year-end. Overall development is 3% below pre-pandemic levels, signaling a return to more sustainable growth.

Vacancy rates edged up to 7.5%, driven by new deliveries, but remained within healthy bounds. Notably, crane-equipped buildings, which represent just 6.7% of total inventory, maintain a lower vacancy rate of 5.2%, underscoring strong demand from heavy manufacturing and specialized logistics users.

“Houston’s industrial market continues to offer strong opportunities for tenants, with steady leasing activity and a growing supply of modern space,” said Drew Coupe, a Principal with Avison Young. “However, competition for specialized space is intensifying.”

The Port of Houston continues to be a key economic driver, handling a record 4.2 million TEUs over the past 12 months—a 4.3% increase year-over-year. This reinforces Houston’s position as a premier logistics hub and supports ongoing industrial demand.