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Houston’s Industrial Sector Posts a 5 Percent Vacancy Rate

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The numbers are in: Houston’s industrial market ended 2018 on a
red-hot note.

After a year defined by deals of all sizes in the e-commerce,
logistics and petrochemical industries, Houston’s industrial market
ended 2018 with a 5 percent vacancy rate, which is lower than it’s
been since the second quarter of 2016, according to a
fourth-quarter report from CBRE.

And 2018 marked a record for industrial projects breaking ground
in the Bayou City. Roughly 16.3 million square feet in new
industrial construction broke ground in Houston in 2018, which is
2.7 million square feet higher than the previous construction
record set in 2014, per the report. The average size of an
industrial property being built right now is 233,100 square feet,
per the CBRE report.

And in what signals developers’ confidence in the north Houston
submarket, more than one-third of the industrial properties under
construction are being built in the north submarket, per the
report. Approximately 5.1 million square feet of industrial space
is underway in north Houston. A total of 14 million square feet in
industrial properties is under construction throughout the
city.

The largest industrial lease signed in Houston in the fourth
quarter was for Kentucky-based Valvoline, an automotive lubricant
distributor. Valvoline inked a 472,564-square-foot lease at Port
Crossing Commerce Center in southwest Houston in the fourth
quarter, according to CBRE.

On the investment side, some of the largest industrial deals in
the fourth quarter included Miami-based Southern Glazer’s Wine and
Spirits buying a 673,785-square-foot distribution
facility
in Katy from Atlanta-based Oakmont Industrial Group,
as well as a private buyer purchasing a 447,605-square-foot
manufacturing facility in southeast Houston at Greens Port
Industrial Park from Houston-based Hines. The facility is fully leased to Houston-based
AFGlobal Corp.

Another large industrial property that traded hands in the
fourth quarter was Switzerland-based Zurich Insurance Group Ltd.
buying a 554,536-square-foot property in southwest Houston from
Seefried Industrial Properties for an undisclosed sum, per the CBRE
report. The facility was built for Minnesota-based electronics
retailer Best Buy (NYSE: BBY) at 636 Highway 90A at the corner of
Cravens Road and Highway 90 in Missouri City in Fort Bend County,
HBJ previously reported.

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