The document summarizes industrial real estate market trends in Houston, Texas for Q1 2018. It finds that industrial construction activity increased significantly over the quarter, with over 9.2 million square feet completed, driven by demand from companies like Amazon, Walmart, and FedEx. Absorption of occupied space was strong at over 1.5 million square feet during the quarter, while vacancy rates remained low. The industrial market continues to be supported by job and economic growth in the Houston area.

1. Share or view online at colliers.com/texas/houstonindustrial
Houston Industrial construction activity increases to over
9.2M SF in Q1
Research &
Forecast Report
HOUSTON | INDUSTRIAL
Q1 2018
Lisa Bridges Director of Market Research | Houston
Although Houston’s economy slowed significantly in 2015 and
remained weak in 2016-2017, the demand for consumer products
continues to spur growth in the industrial sector. Companies
like Amazon, Walmart, Best Buy and FedEx are just some of the
tenants in the market leasing, building, or moving into distribution
and logistics hubs. During the first quarter of 2018, developers
have been busy constructing over 9.2M SF of new industrial
inventory, 6.6M SF of which is speculative. Much of the
development and leasing activity is located in the East-Southeast
Far submarket and can be tied directly to Houston’s Port activity.
The average vacancy rate only increased 10 basis points over the
quarter, even though 2.1M SF of new inventory was completed.
Over 1.5M SF of Houston’s industrial inventory was absorbed
during the first quarter of 2018. Companies such as Amazon,
Kuraray America, GHX, Flexo and Air General relocated and/or
expanded during the first quarter.
According to the U.S. Bureau of Labor Statistics, the Houston
MSA created 67,100 jobs (not seasonally adjusted) between
February 2017 and February 2018, an annual growth rate of
2.2%, which is above the national average job growth rate of
1.6%.
Did You Know?
Port Houston is the ranked first in the Nation
based on foreign waterborne tonnage.
The Houston Ship Channel is home to the
second largest petrochemical complex in the
world.
Port Houston is ranked third in the Nation in
total trade value ($131 billion).
Summary Statistics
Houston Industrial Market Q1 2017 Q4 2017 Q1 2018
Vacancy Rate 5.3% 5.2% 5.3%
Net Absorption (SF) 3,236,977 411,947 1,572,876
New Construction (SF) 3,733,273 612,567 2,101,533
Under Construction (SF) 6,175,111 8,051,083 9,266,194
Asking Rents
Per Square Foot Per Year (NNN)
Average $7.07 $6.77 $6.76
Warehouse/Distribution $6.96 $6.58 $6.50
Flex/Service $9.99 $9.48 $9.80
Tech/R&D $11.78 $9.75 $9.85
Market Indicators
Relative to prior period
Annual
Change
Quarterly
Change
Quarterly
Forecast*
VACANCY
NET ABSORPTION
NEW CONSTRUCTION
UNDER CONSTRUCTION
*Projected

2. Change in Sales (Year over Year)
©2016 Real Capital Analytics, Inc. All Rights Reserved. Data believed to
revision
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18
Average Price Per SF
©2016 Real Capital Analytics, Inc. All Rights Reserved. Data believed to b
revision
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18
Average CAP Rate
6.4%
6.6%
6.8%
7.0%
7.2%
7.4%
7.6%
7.8%
8.0%
8.2%
8.4%
Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18
2 Houston Research & Forecast Report | Q1 2018 | Industrial | Colliers International
Sales Activity
Source: Real Capital Analytics
Q1 2018
NO. OF PROPERTIES: 35
TOTAL SF: 3.3M
AVERAGE $/SF: $79
AVERAGE CAP RATE: 6.3.%
Job Growth & Unemployment
(not seasonally adjusted)
UNEMPLOYMENT 2/17 2/18
HOUSTON 5.9% 4.7%
TEXAS 4.8% 4.1%
U.S. 4.9% 4.4%
Vacancy & Availability
Houston’s average industrial vacancy rate increased 10 basis points from 5.2%
to 5.3% over the quarter. At the end of the first quarter, Houston had 27.8M SF
of vacant industrial space for direct lease and an additional 1.8M SF of vacant
sublease space. Among the major industrial corridors, the Northeast Corridor
had the lowest vacancy rate at 2.1%, followed by the South Corridor at 3.5%.
The submarket with the largest percentage of vacant space is the North Corridor
which had a 6.9% vacancy rate.
Absorption & Demand
Houston’s industrial market posted 2.1M SF of positive net absorption in the
first quarter, an increase from the 613,000 SF recorded in the previous quarter.
Some of the tenants that relocated or expanded into newly constructed space
during Q1 2018 include Amazon (1,016,000 SF) in the Northwest Outliers
submarket, Kuraray America (465,851 SF) in the East-Southeast Far submarket
and Flexo Converters USA (112,000 SF) in the North Hardy Toll Rd submarket.
The Northwest and North Corridors posted the largest amount of positive net
absorption during the first quarter, posting 1.2M SF and 0.6M SF, respectively.
The submarkets with the highest amount of negative absorption include the
Inner Loop and Southwest Corridors, posting negative 0.3M SF and 0.2M SF,
respectively.
Rental Rates
According to CoStar, our data service provider, Houston’s citywide average
quoted industrial rental rate for all product types remained steady over the
quarter at $6.76 per SF NNN. According to Colliers’ internal data, actual lease
transactions are in the $4.56 – $5.04 per SF NNN range for newer bulk industrial
spaces, while flex rates range from $7.20 to $10.80 per SF depending on the
existing improvements or, the allowance provided for tenant improvements and
the location of the property.
According to CoStar, the average quoted NNN rental rates by property type are
as follows: $6.50 per SF for Warehouse Distribution space; $9.80 per SF for
Flex/Service space; with Tech/R&D space averaging $9.85 per SF.
JOB GROWTH
Annual
Change
# of Jobs
Added
HOUSTON 2.2% 67.1K
TEXAS 2.4% 288.6K
U.S. 1.6% 2.3M

3. 3 Houston Research & Forecast Report | Q1 2018 | Industrial | Colliers International33
Q1 2018 Industrial Lease Transactions over 50,000 SF
BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE
Bayport Logistics Park Bldg 2 & 3 East-Southeast Far (bldg 2) 369,755
(bldg 3) 192,000
Kuraray America1
Mar-18
Bayport South Business Park East-Southeast Far 257,835 Unis, LLC2
Feb-18
2333 Clinton Dr East I-10 Outer Loop 138,921 Richardson Steel2
Mar-18
8575 Volta Dr North Hardy Toll Rd 112,000 Flexo Converters USA2
Feb-18
16102 Spence Rd North Outer Loop 73,500 Frito-Lay Inc.3
Feb-18
Leasing Activity
Houston’s industrial leasing activity decreased 31.4% over the quarter from 7.5M SF in Q4 2017 to 5.1M SF in Q1 2018. Most of the
transactions consisted of leases for 50,000 SF or less; however, there were several larger deals that occurred. The table below highlights
some of the larger transactions that closed in Q1 2018.
1
Pre-lease in a proposed/under construction building
2
Direct/New
3
Renewal
Under Construction
Currently 9.3M SF of industrial space is under construction in Houston and 32.8% is pre-leased. Only 6.1% of the 6.6M SF of spec space
under construction is pre-leased at this time. The largest project under construction is a 673,785-SF spec distribution warehouse located
in the Northwest Outliers submarket. Below is a partial list of buildings currently under construction.
Q1 2018 Industrial Under Construction - 250,000 SF or greater
BUSINESS PARK/ADDRESS SUBMARKET RBA % LEASED DEVELOPER/CONTRACTOR
DELIVERY
DATE
BUILDING DESCRIPTION
525 Cane Island Pky Northwest Outliers 673,785 0% Oakmont Industrial Group Jul-18 Spec Distribution
1302 Wharton Weems Blvd -
Bldg B2
East-Southeast Far 600,360 0% Liberty Property Trust Apr-18 Spec Distribution
636 Hwy 90 Hwy 59/Hwy90 550,000 100% Seefried Properties, Inc. Oct-18 BTS for Best Buy
Cedar Port Industrial Park East-Southeast Far 500,000 100% Avera Companies Sep-18 BTS Vinmar International
Bayport South Business Park III East-Southeast Far 500,000 0% Johnson Development Assoc. Mar-18 Spec Distribution
Northwest Logistics Center West Outer Loop 411,442 0% Stream Realty Partners, L.P. Jun-18 Spec Distribution
Baypor Logistics Park Bldg 2 East-Southeast Far 369,755 100% Avera Companies Sep-18 BTS for Kuraray
Fallbrook Pines Business Park Hwy 290/Tomball Pky 368,467 0% TrammellCrowCompany Aug-18 Spec Warehouse
Gateway Northwest Business
Park
Northwest Hwy 6 368,432 43.7% Duke Realty Corporation Jun-18 Spec Warehouse
Point North Three North Hardy Toll Road 337,700 0% Duke Realty Corporation Aug-18 Spec Warehouse
22806 Northwest Lake Dr Northwest Outliers 320,000 100% Kingham Dalton Ltd. Dec-18 BTS for AIV Inc.
Port 10 Logistics Center East-Southeast Far 294,323 0% Pontikes Development Jun-18 Spec Distribution
Cutten Distribution Center I North Fwy/Tomball Pky 293,280 0% Clay Development May-18 Spec Distribution
Mason Ranch Bldg 2 Northwest Outliers 282,880 0% Exeter Property Group Nov-18 Spec Warehouse

4. 4 Houston Research & Forecast Report | Q1 2018 | Industrial | Colliers International
Q1 2018 Houston Industrial Market Statistical Summary
MARKET
RENTABLE
AREA
DIRECT
VACANT SF
DIRECT
VACANCY
RATE
SUBLET
VACANT
SF
SUBLET
VACANCY
RATE
TOTAL
VACANT SF
TOTAL
VACANCY
RATE
1Q18 NET
ABSORP-
TION
4Q17 NET
ABSORP-
TION
1Q18
COMPLE-
TIONS
4Q17
COMPLE-
TIONS
SF UNDER
CONSTRUC-
TION
HOUSTON TOTAL 558,986,873 27,786,408 5.0% 1,840,706 0.3% 29,627,114 5.3% 1,572,876 411,947 2,101,533 612,567 9,266,194
CBD-NW Inner Loop 11,439,777 607,659 5.3% 20,851 0.2% 628,510 5.5% (89,155) (44,358) 0 0 14,250
Downtown 31,329,152 1,524,516 4.9% 21,700 0.1% 1,546,216 4.9% (88,704) (66,950) 0 0 0
North Inner Loop 4,858,519 329,994 6.8% 0 0.0% 329,994 6.8% (72,779) 66,564 0 0 0
Southwest Inner
Loop
7,019,616 158,630 2.3% 0 0.0% 158,630 2.3% (26,513) (71,213) 0 0 0
INNER LOOP
CORRIDOR TOTAL
54,647,064 2,620,799 4.8% 42,551 0.1% 2,663,350 4.9% (277,151) (115,957) 0 0 14,250
North Fwy/Tomball
Pky
24,270,630 2,135,157 8.8% 175,680 0.7% 2,310,837 9.5% (35,794) 137,708 0 11,200 511,850
North Hardy Toll Rd 34,689,354 2,138,290 6.2% 261,986 0.8% 2,400,276 6.9% 406,096 669,150 0 21,350 609,975
North Outer Loop 21,971,061 895,325 4.1% 50,135 0.2% 945,460 4.3% 184,950 8,629 0 23,645 0
The Woodlands/
Conroe
17,647,593 1,060,586 6.0% 91,183 0.5% 1,151,769 6.5% 78,805 (135,473) 0 0 67,866
NORTH CORRIDOR
TOTAL
98,578,638 6,229,358 6.3% 578,984 0.6% 6,808,342 6.9% 634,057 680,014 0 56,195 1,189,691
Northeast Hwy 321 1,324,329 45,000 3.4% 0 0.0% 45,000 3.4% 7,340 (12,740) 0 0 0
Northeast Hwy 90 18,482,935 245,203 1.3% 0 0.0% 245,203 1.3% 316,743 (191,435) 143,500 0 21,000
Northeast I-10 4,078,645 109,477 2.7% 0 0.0% 109,477 2.7% 48,950 (91,302) 0 0 0
Northeast Inner Loop 11,594,976 333,943 2.9% 22,500 0.2% 356,443 3.1% (109,402) 27,231 0 0 0
NORTHEAST
CORRIDOR TOTAL
35,480,885 733,623 2.1% 22,500 0.1% 756,123 2.1% 263,631 (268,246) 143,500 0 21,000
Hwy 290/Tomball Pky 22,429,289 802,814 3.6% 356,305 1.6% 1,159,119 5.2% 42,307 133,729 104,169 0 597,713
Northwest Hwy 6 10,370,237 452,058 4.4% 0 0.0% 452,058 4.4% 100,740 (21,367) 66,745 14,000 478,172
Northwest Inner Loop 60,224,171 3,080,706 5.1% 122,798 0.2% 3,203,504 5.3% (48,941) (104,974) 19,000 0 0
Northwest Near 18,409,802 1,071,906 5.8% 34,421 0.2% 1,106,327 6.0% (139,767) (167,231) 154,661 0 0
Northwest Outlier 22,984,405 1,559,991 6.8% 41,789 0.2% 1,601,780 7.0% 1,168,156 (648,783) 1,016,000 0 1,780,499
West Outer Loop 25,599,573 1,410,867 5.5% 70,194 0.3% 1,481,061 5.8% 30,809 45,952 63,500 0 433,042
NORTHWEST
CORRIDOR TOTAL
160,017,477 8,378,342 5.2% 625,507 0.4% 9,003,849 5.6% 1,153,304 (762,674) 1,424,075 14,000 3,289,426
South Highway 35 34,995,111 1,223,670 3.5% 6,935 0.0% 1,230,605 3.5% (248,896) 55,726 52,520 0 111,593
South Inner Loop 12,370,440 386,274 3.1% 20,295 0.2% 406,569 3.3% 228,169 (124,620) 0 0 0
SOUTH CORRIDOR
TOTAL
47,365,551 1,609,944 3.4% 27,230 0.1% 1,637,174 3.5% (20,727) (68,894) 52,520 0 111,593
East I-10 Outer Loop 12,978,443 265,387 2.0% - 0.0% 265,387 2.0% (94,521) (81,500) 0 0 10,000
East-Southeast Far 62,381,827 3,312,724 5.3% 323,500 0.5% 3,636,224 5.8% 104,700 1,115,798 470,902 542,372 3,928,941
Southeast Outer Loop 17,294,243 644,821 3.7% 15,000 0.1% 659,821 3.8% (169,982) (34,427) 0 0 0
SOUTHEAST
CORRIDOR TOTAL
92,654,513 4,222,932 4.6% 338,500 0.4% 4,561,432 4.9% (159,803) 999,871 470,902 542,372 3,938,941
Highway 59/Highway
90
23,052,700 1,587,150 6.9% 137,304 0.6% 1,724,454 7.5% (215,556) 98,950 0 0 550,000
Southwest Far 12,569,626 859,739 6.8% 12,564 0.1% 872,303 6.9% 216,459 39,190 10,536 0 85,300
Southwest Outer
Loop
13,285,632 817,231 6.2% 12,566 0.1% 829,797 6.2% (16,095) (164,695) 0 0 13,198
Sugar Land/Ft Bend
Co
21,334,787 727,290 3.4% 43,000 0.2% 770,290 3.6% (5,243) (25,612) 0 0 52,795
SOUTHWEST
CORRIDOR TOTAL
70,242,745 3,991,410 5.7% 205,434 0.3% 4,196,844 6.0% (20,435) (52,167) 10,536 0 701,293
Market Summary

5. TOTAL INDUSTRIAL
INVENTORY 549M SF
OTHER: 7%
SERVICE/SHOWROOM 1%
QUARTERLY
LEASING
ACTIVITY
R&D: 1%
DISTRIBUTION: 14%
WAREHOUSE: 60%
MANUFACTURING: 17%
8.5M SF
6.1M SF
7.5M SF
5.1M SF
5.3% 2.1M SF $6.76/SF
VACANCY NEW CONSTRUCTION AVG. RENTAL RATE
Q12018
QUARTERLY
ABSORPTION
Q1 2017
Q2 2017 0.5M SF
Q3 2017 3.9M SF
Q4 2017 0.4M SF
Q1 2018 1.6M SF
3.2M SF
7.8M SFQ1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
5 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
Colliers International | Market
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000 Address, Suite #
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5 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2018 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
Colliers International | Houston
1233 West Loop South, Suite 900
Houston, Texas 77027
+1 713 222 2111
colliers.com/texas/houston
FOR MORE INFORMATION
Lisa Bridges
Director of Market Research | Houston
+1 713 830 2125
lisa.bridges@colliers.com
Q1 Houston Industrial 2018 Highlights