Q2 2017 | Houston Industrial | Research & Forecast Report

Houston’s industrial market sees continued growth on the east side due to boom in petrochemical industry

During the first half of 2017, 3.0M SF of Houston’s industrial
inventory was absorbed, all occurring during the first quarter.
Second quarter absorption was close to zero, posting only -13,100
SF.

The average vacancy rate increased 20 basis points over the
quarter from 5.3% in to 5.5%. A little over 1.5M SF of new product
delivered during the second quarter, bringing the mid-year new
inventory total to over 5M SF. There is currently 4.2M SF under
construction and 77.2% is pre-leased. Most of the leased space
under construction are build-to-suit projects for companies such as
Amazon, FedEx, Katoen Natie and Vinmar International.

In addition to the Industrial distribution and warehouse space
under construction, two large petrochemical plants have been
announced in recent months. Brazil-based Braskem announced
late June it will build a $675 million petrochemical manufacturing
facility next to its existing production facilities in La Porte, TX.
And, LyondellBasell plans to build a $2.4 billion petrochemical
plant near the Houston Ship Channel, the largest factory of its
kind in the world. Both companies site the cheap cost of fuel, the
large inventory available of natural gas liquids as well as access
to foreign markets through exports as a source of growth in the
petrochemical industry.

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