Colliers: Houston Industrial Market Report, Q3 2025

Although vacancy increased due to more supply added to the market than absorbed, leasing velocity has returned, up 16% from last quarter and positioning the industrial market for continued positive performance in the quarters to come. Danny Rice, President

Key Takeaways

New supply continued to outpace demand in the third quarter, with 4.7M SF delivered compared to 2.7M SF of net absorption.
Construction activity surged to 21.8M SF, representing the highest level in two years and a 52.8% increase year over year.
Leasing activity reached 10.8M SF, rising 15.8% from last quarter and slightly up from the 10.6M SF from the same period last year.
The overall vacancy rate edged up 20 basis points to 7.3% from the prior quarter and up from the year-ago figure of 6.7%, driven by increasing deliveries.
Average asking rents rose to $10.62 PSF, reflecting a 2.4% increase quarter over quarter and an 11.8% year-over-year growth.
Sublease availability at 6.2M SF has been consistently increasing, up 16.0% from the previous quarter and up 24.8% compared to the same time last year.

Historic Comparison

Market Fundamentals

Houston’s industrial sector is demonstrating strong fundamentals and long-term potential, fueled by accelerating construction and high-impact lease transactions – even as supply outpaces demand. Leasing activity remained strong at 10.8 million square feet, slightly above last quarter and just below the same period last year.

The development pipeline is substantial, with 131 buildings totaling 21.8 million square feet, of which 28.1% is preleased. Construction is heavily concentrated in the Northwest and Southeast submarkets, accounting for 52.5% of all space underway. Notably, construction volume has increased consistently each quarter during the past year.

In Q3 alone, 72 buildings totaling nearly 7.9 million square feet broke ground. Key multi-building projects include Carson 288, four buildings totaling 995,893 square feet in the South; Gateway 59 in the Northeast with four buildings totaling 739,681 square feet; and TriPort 8 Logistics Park in the Southeast with five buildings totaling 881,521 square feet.

Houston’s rapidly expanding industrial market is becoming a magnet for major manufacturers, underscored by Eli Lilly and Company’s recent commitment to a $6.5 billion, 236-acre manufacturing facility at Generation Park in northeast Houston.

Key Economic Driver

The Port of Houston continues to be a major catalyst for industrial growth. Following a record-setting July, total tonnage is up 5.0% year to date through August, with container volumes nearing 3 million TEUs, also up 5.0% compared to 2024. The port led the nation in exports in 2024, shipping $180.9 billion in goods and commodities abroad.

Deliveries and Net Absorption

New deliveries totaled 4.7 million square feet in Q3, exceeding net absorption of 2.7 million square feet. While absorption is down 61.6% year over year, it showed a modest increase over the previous quarter. Year to date, net absorption stands at 6.3 million square feet, less than half of the 13.7 million square feet delivered. About 15.0% of all Q3 deliveries were preleased.

Major move-ins contributing to absorption include Creative Innovation, 496,560 square feet in Levey Logistics Park in the South; Constellation Beverage, 496,421 square feet at TGS Cedar Port DC2 in the Southeast; and SBM Offshore, 346,637 square feet at I-10 East Commerce Center, also in the Southeast.

Leasing Activity

Large leases drove Q3’s 10.8 million square feet of leasing activity. Topping the list are PepsiCo’s 1.1 million square feet in I-10 West Trade Center in Brookshire, Panelmatic’s 728,080 square feet in WestPoint 45 in North Houston – a Colliers transaction, and Inventec’s 540,000 square feet in Park 1099 in Katy.

Vacancy and Rents

The overall vacancy rate ticked up to 7.3% from 7.1% last quarter, up from 6.7% a year ago. Despite the rise, rents remain strong, increasing 5.5% quarter over quarter and 8.9% year over year.

Outlook

Fueled by a record-setting port performance and sustained leasing momentum amid a solid construction pipeline, Houston’s industrial market offers a strategic opportunity for long-term investment and expansion.