Q3 2020 | Houston Industrial | Research & Forecast Report

Houston's industrial market continues to expand amid economic and political uncertainty
 
HOUSTON - Oct. 23, 2020 - PRLog -- Commentary by Ryan Byrd | Principal and Patrick Duffy | President

Third-quarter economic activity recovered in the U.S. after a precipitous drop in Q2 as COVID lockdowns in most of the country were eased. The energy sector, a major contributor to the industrial industry in Houston, continued to struggle as rig counts dropped to a historically low level of approximately 270 active rigs in the U.S., down 570 from the same time last year and down by over 1,600 from the peak in 2014. Oil and gas prices have been trading in a range that will not spur new drilling of any significant amount in the near term. Oil field services firms, a significant component of our local industrial economy, have been hit very hard.

The Houston industrial market plodded through the 3rd quarter with a lower than average absorption number of 1.3 million square feet, but despite continued COVID slowdowns, leasing activity remained steady. At almost 6 million square feet of leases executed, Houston remained on par with the previous two quarters. General market uncertainty caused many tenants (who had the option) to delay real estate decisions and created a dampening of activity. We believe that underlying demand is more robust than the absorption numbers suggest. The lockdowns have accelerated the growth of e-commerce globally, a significant driver of industrial (distribution) demand. Amazon remains the most significant player locally at almost half of the quarter's absorption. Local tenants in the 40- 60,000 square foot range remained the most active tenant group, especially in the Northwest and Southwest submarkets. Downward pressure on rents increased over the quarter, with the North submarket pressed to give the most concessions.

At the beginning of the year, we were concerned that supply was outpacing demand; however, Covid and low oil prices led to... To read the full report, click here: https://www2.colliers.com/en/Research/Houston/Q3-2020-Hou...

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Lisa Bridges | Director of Market Research
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Tags:Industrial Market Report
Industry:Real Estate
Location:Houston - Texas - United States
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