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3/21/25
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This report was provided by real estate services firm Avison Young
In Houston's industrial market, smaller spaces of less than 250k sf command a 10% higher average rent than larger spaces, greater than 250k sf, according to recent study from Avison Young. This data indicates that the true engine of the Houston industrial market is the consistent demand from local businesses for smaller space.
Logistics, distribution, and parcel delivery companies are the dominant occupiers in both size categories, accounting for approximately 22% of all leased space since 2010. This trend continues, with these sectors representing 17% of leases for larger spaces and 22% for smaller spaces in Q4 2024.
Large tenant leases often grab headlines and can significantly impact the market. In particular, this was during the pandemic boom when a surge in demand from retail and healthcare drove almost a 10% rent increase for larger spaces in Q3 2020 alone, with tenants including Amazon, Dollar Tree, and Medline Industries each completing leases for larger spaces.
“The greater Houston region will certainly benefit from an influx of large industrial users such as Tesla and Apple. I believe this is indicative of a trend that we will continue to see over the coming years as this market offers a more favorable cost of living, higher land availability, and lower land prices as compared to other major Texas markets like Dallas and Austin,” said Drew Coupe, Principal with Avison Young who is based in the Houston office. “The fundamental core of Houston’s industrial user base has historically been small- to mid-sized users that are local to the area. This user profile is poised to proliferate in the coming years, and demand for industrial assets under 250k sf will remain high. Developers who can embark on smaller industrial assets are likely to be successful in leasing based on future projections.”
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