Houston, TX Industrial Market Report Q3 2026

Houston’s industrial market is shifting toward more balanced conditions as new supply continues to outpace demand. Vacancy increased to 7.4%, while 20.9 million square feet of net absorption trailed 27.9 million square feet of deliveries. Leasing activity remains strong, with more than 45 million square feet of new leases signed through the first three quarters of 2026, the strongest pace on record for the period. Demand remains concentrated in modern logistics facilities with higher clear heights, greater power capacity, and efficient loading configurations. Buildings larger than 100,000 square feet delivered since 2023 recorded 23.5 million square feet of absorption, while comparable properties built before 2000 posted roughly 2 million square feet of negative absorption. Tenant relocations and consolidations have added second-generation space, increasing competition for older facilities. Asking rents declined 1.8% year-over-year as rising availability increased tenant leverage.

Key Findings

Strong leasing activity is helping Houston absorb new industrial inventory, although the sizable development pipeline is keeping vacancy elevated and limiting landlord pricing power.
Tenant demand is increasingly concentrated in newer, highly functional facilities, widening the performance gap between modern logistics properties and aging industrial inventory.
Industrial investment liquidity is improving as lenders become more competitive and institutional buyers selectively pursue well-leased assets with durable income and value-add potential.

Houston Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

Houston Demographics

Source: Oxford Economics

Unemployment Rate: 4.6%
Current Population: 8,009,444
Households: 2,864,361
Median Household Income: $83,810

Houston’s diversified economy continues to provide a durable foundation for industrial demand. The metro population has reached approximately 8.0 million residents after adding more than 1.5 million people since 2010. Population growth remains positive at 1.3% annually, although the pace has moderated from the post-pandemic period. Houston’s economic base extends well beyond energy into healthcare, aerospace, logistics, petrochemicals, advanced manufacturing, and professional services. Recent investments in life sciences and advanced manufacturing reinforce this diversification, including Eli Lilly’s planned biomanufacturing facility and Apple’s Advanced Manufacturing Center. The Port of Houston and the metro’s extensive transportation infrastructure support Houston’s position as a major distribution and manufacturing hub.