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Demand for industrial and warehouse space in Houston has fluctuated over the past several years. The vacancy rate fell to a five-year low of 5.0 percent in Q4/22 amid strong absorption and record construction activity. As new supply continued to outpace demand, vacancy trended upward, reaching a cycle high of 7.4 percent in Q4/25 and remaining at that level in Q1/26.
Net absorption in Houston’s industrial market has moderated from the elevated levels seen in ’24. In Q1/26, net absorption totaled 3.6 million square feet, slightly below the 3.7 million square feet recorded in Q4/25 but still below the pace recorded earlier in the cycle. This reflects relatively stable but subdued leasing activity alongside continued new supply additions.
At the end of Q1/26, Houston had 85.8 million square feet of industrial and warehouse space listed as available, up from 82.6 million square feet in Q4/25. This total includes vacant, sublet, and soon-to-be-vacant space, as well as occupied space currently being marketed for lease.
Higher interest rates, tighter lending standards, and softer absorption have slowed building activity in Houston’s industrial market. As of Q1/26, 28.0 million square feet were under construction, reflecting a continued rebound from the lows reached in mid-‘24 but remaining well below the cycle peak of 36.1 million square feet in Q4/22.
Despite softer absorption, industrial rents in Houston remain elevated. The average triple net (NNN) rent reached $10.39 per square foot in Q1/26, slightly below $10.65 in Q4/25 but up from $9.52 in Q1/25. Under NNN lease terms, tenants are responsible for expenses such as property taxes, maintenance, utilities, and security. Over the past five years, rents have increased approximately 38 percent, underscoring sustained demand for quality space even in a more cautious leasing environment.
Prepared by Greater Houston Partnership Research
Leta Wauson
Research Director
Greater Houston Partnership
[email protected]
