This Houston Submarket’s Vacancy Rate is a ‘Completely New Phenomenon’

January 19 < 1

With all eyes on Houston’s struggling office market, it can seem like the city’s commercial real estate market has gone bust. But outside of Houston’s urban core, industrial and Port-anchored developments are booming.

Houston’s southeast submarket vacancy rate is at roughly 3.4 percent, which is well below the national average of 6.4 percent, said Matteson Hamilton, Houston industrial managing director of Dallas-based Stream Realty Partners LP, citing data from Houston-based CoStar Group’s year-end report.

That low vacancy rate is a “completely new phenomenon” compared to the 20 percent vacancy rate the submarket had during the Great Recession, according to Stream’s fourth-quarter industrial report. The submarket is highly concentrated with petrochemical, manufacturing and logistics companies.

Of the nearly 2.4 million square feet of space under construction in the area, 1.3 million has already been preleased, according to the report. But that’s not to say landlords aren’t facing challenges for leasing space in the submarket.

“A lot of users in this submarket right now are demanding flexibility,” Hamilton said. “If they go into a space, (they’re) structuring situations where they have additional rights to adjacent space. … One of the biggest commodities people are asking for is rail. It’s a big commodity, and it’s not as available as people might think. People in this submarket and people in plastics are really looking for rail access.”


By: Cara Smith
SOURCE: Houston Business Journal