Q4 2017 | Houston Industrial | Research & Forecast Report

Houston’s industrial market closes out the year with a strong finish

The resiliency of Houston’s industrial real estate market is truly astounding. Outsiders have always considered Houston to be an “oil town” with our economic success tied to the geopolitical intricacies of the international oil and gas markets. Three years into the oil and gas downturn, Houston has proven yet again that we have a truly diversified economic base. As a result, Houston’s industrial real estate market has enjoyed a disproportionate benefit of that concerted effort to have a truly balanced economy.

From 2009 to 2014, while the national economy sputtered along due to anti-business policies of the Obama administration, Houston enjoyed a countercyclical economic boon as all sectors of the oil and gas industry added jobs, increased investment and drove demand for oil service related real estate. Manufacturers and distributors made significant real estate commitments to manufacturing, property and equipment as they worked to meet the demand for materials and services related to the growth in domestic shale exploration and production. When the music stopped in November 2014, outsiders such as wall street analysts and CNBC pundits threw their hands in the air, called it the end of Houston’s growth story and declared that it would be the 1980’s all over again.

Houston real estate veterans, however, trusted in our diversified economy and found ways to meet the demand of other sectors as the national economic output increased. Certainly, the industrial real estate community had issues with subleases, defaults and other activity that arose due to the energy industry downturn. However, the growth of e-commerce, the region’s natural population growth, increased Port of Houston infrastructure investment and increased consumer demand all contributed to a robust industrial market that truly reflects Houston’s economic diversity and its irrepressible ability to bounce back from adversity.

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