Houston's industrial market saw positive net absorption of 3 million square feet in the third quarter of 2017. Vacancy rates decreased slightly to 5.4% as demand for distribution and warehouse space continues to grow. Companies like Amazon, DHL, and FedEx absorbed over 1.5 million square feet by opening new distribution and logistics hubs. Over 5 million square feet of new industrial space is under construction, though vacancy rates remain low across several submarkets.

1. Share or view online at colliers.com/texas/houstonindustrial
Houston’s industrial market sees growth in distribution
space and logistic hubs
Research &
Forecast Report
HOUSTON | INDUSTRIAL
Q3 2017
Lisa Bridges Director of Market Research | Houston
During the third quarter of 2017, 3.0M SF of Houston’s industrial
inventory was absorbed, pushing the 2017 year-to-date total to
6.2M SF. Although Houston’s economy slowed significantly in 2015
and remained weak in 2016, the demand for consumer products
continues to spur growth in the industrial sector. Companies like
Amazon, DHL and FedEx are just some of the tenants in the market
leasing or building distribution and logistics hubs. Companies such
as Ikea, Daikin, Lowes and Home Depot that manufacture and/or
distribute buildings supplies for new developments, as well as now
for rebuilding Harvey impacted properties, have expanded their
footprint in the market as well.
The average vacancy rate has remained low for several years now,
hovering between 5.5% and 5.3%. Over the quarter, the average
vacancy rate decreased marginally from 5.5% to 5.4%. A little
over 2.5M SF of new product delivered during the third quarter
bringing the 2017 new inventory total to over 7.6M SF. Currently,
5.3M SF of industrial space is under construction of which 30.7%
is pre-leased.
In addition to the Industrial distribution and warehouse space under
construction, two large petrochemical plants are in the planning
stages. Brazil-based Braskem’s $675 million polypropylene
plant is scheduled to start construction near year-end 2017, with
completion targeted for the first quarter of 2020. LyondellBasell
plans to build a $2.4 billion petrochemical plant, the largest factory
of its kind in the world near the Houston Ship Channel.
According to the U.S. Bureau of Labor Statistics, the Houston MSA
created 53,500 jobs (not seasonally adjusted) between August
2016 and August 2017, an annual growth rate of 1.8%. Industry
sectors that added jobs include: Mining and Logging, Manufacturing,
Professional and Business Services, Health Care and Social
Assistance, and Educational Services.
Summary Statistics
Houston Industrial Market Q3 2016 Q2 2017 Q3 2017
Vacancy Rate 5.2% 5.5% 5.4%
Net Absorption (SF) 6,515,187 -53,222 3,035,998
New Construction (SF) 6,291,802 1,442,223 2,542,549
Under Construction (SF) 9,690,224 4,227,300 5,291,835
Asking Rents
Per Square Foot Per Year
Average $6.97 $6.89 $6.90
Warehouse/Distribution $6.57 $6.56 $6.55
Flex/Service $11.18 $10.76 $10.08
Tech/R&D $11.78 $12.03 $10.95
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 belie
revision
-100.0%
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
Q3 '13 Q3 '14 Q3 '15 Q3 '16 Q3 '17
Average Price Per SF
©2016 Real Capital Analytics, Inc. All Rights Reserved. Data believed
revision
$0
$20
$40
$60
$80
$100
Q3 '13 Q3 '14 Q3 '15 Q3 '16 Q3 '17
Average CAP Rate
6.4%
6.9%
7.4%
7.9%
8.4%
8.9%
Q3 '13 Q3 '14 Q3 '15 Q3 '16 Q3 '17
2 Houston Research & Forecast Report | Q3 2017 | Industrial | Colliers International
Sales Activity
Source: Real Capital Analytics
Q3 2017
NO. OF PROPERTIES: 34
TOTAL SF: 3.7M
AVERAGE $/SF: $81
AVERAGE CAP RATE: 7.3%
Job Growth & Unemployment
(not seasonally adjusted)
UNEMPLOYMENT 8/16 8/17
HOUSTON 5.7% 5.2%
TEXAS 4.9% 4.5%
U.S. 5.1% 4.5%
JOB GROWTH
Annual
Change
# of Jobs
Added
HOUSTON 1.8% 53.5K
TEXAS 2.4% 286.3K
U.S. 1.5% 2.1M
Vacancy & Availability
Houston’s average industrial vacancy rate decreased 10 basis points from 5.5%
to 5.4% over the quarter. At the end of the third quarter, Houston had 28.5M
SF of vacant industrial space for direct lease and an additional 1.3M SF of vacant
sublease space. Among the major industrial corridors, the Northeast Corridor
has the lowest vacancy rate at 2.2%, followed by the South at 3.3%, and then
the Inner Loop at 4.6%. The largest percentage of vacant space is located in the
North Corridor which has an 8.5% vacancy rate.
Currently 5.3M SF of industrial space is under construction in Houston, and
30.7% is pre-leased. Only 1.0% of the 3.7M 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. A
partial list of buildings currently under construction can be found on page 3 of
this report.
Absorption & Demand
Houston’s industrial market posted 3.1M SF of positive net absorption in the
third quarter, bringing the year-to-date total to 6.2M SF. Some of the tenants
contributing to the positive absorption include Amazon which is moving into its
new 855,000 SF fulfillment center in the North Fwy/Tomball Pky submarket,
and FedEx, which is opening its new 800,000 SF distribution warehouse in the
Northwest Outliers submarket. The North and Northwest Corridors saw the
largest positive net absorption during the third quarter, posting 1.3M SF and 1.2M
SF, respectively.
Rental Rates
According to CoStar, our data service provider, Houston’s citywide average
quoted industrial rental rate for all product types decreased marginally over
the quarter from $6.98 to $6.90 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: $6.55 per SF for Warehouse Distribution space; $10.08 per SF for
Flex/Service space; with Tech/R&D space averaging $10.95 per SF.
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
$4.00
$5.00
$6.00
$7.00
$8.00
Industrial Rental Rate and Vacancy Percentage
Houston, TX
Avg Quoted Rent Avg Vacancy
*Vacancy percentage includes direct and sublease space.

3. 3 Houston Research & Forecast Report | Q3 2017 | Industrial | Colliers International33
Q3 2017 Industrial Lease Transactions over 50,000 SF
BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE
Pinto Business Park North 600,000 Emser Tile2
Aug-17
Prologis Park Jersey Village Northwest 300,000 Home Depot3
Sept-17
Bayport North Distribution Center II Southeast 225,000 Supply Chain Management1,3
Jul-17
Point North Cargo Park Northeast 181,540 Starplast3
Sept-17
Central Green Corporate Center North 128,924 DHL3
Sept-17
Satsuma Distribution Center 1 Northwest 99,840 Mahindra USA Inc.1,3
Aug-17
Leasing Activity
Houston’s industrial leasing activity decreased 39.6% over the quarter from 6.8M SF in Q2 2017 to 4.1M SF in Q3 2017. Most of the
transactions consisted of smaller renewals, but there were several new/direct deals that occurred. The table below highlights some of the
larger transactions that closed in Q3 2017.
1
Colliers International Transaction
2
Pre-lease in a proposed/under construction building
3
Direct/New
Under Construction
Q3 2017 Industrial Under Construction - 200,000 SF or greater
BUSINESS PARK/ADDRESS SUBMARKET RBA % LEASED DEVELOPER/CONTRACTOR
DELIVERY
DATE
BUILDING DESCRIPTION
525 Cane Island Pky Northwest Outlier 673,785 0% Oakmont Industrial Group Jul-18 Spec Distribution
Fallbrook Dr North Fwy/Tomball Pky 600,000 100% Hines Jun-18 BTS Emser Tile
Cedar Port Distribution Park East-Southeast Far 500,000 100% Avera Companies Sep-18 BTS Vinmar International
*4838 Borusan Rd East-Southeast Far 501,020 0% Clay Development Aug-18 Spec Warehouse
Northwest Logistics Center West Outer Loop 411,442 0% Stream Realty Partners, L.P. Jun-18 Spec Distribution
Cutten Distribution Center I North Fwy/Tomball Pky 293,280 0% Clay Development Jan-18 Spec Distribution
Bayport South Business Park
10535 Red Bluff Rd
East-Southeast Far 257,835 0% Johnson Development Feb-18 Spec Distribution
Energy Commerce Bldg D East-Southeast Far 232,960 0% Clay Development Feb-18 Spec Distribution
22533 NW Lake Dr Northwest Outlier 231,839 0% The Carson Companies Mar-18 Spec Warehouse
5121 AmeriPort Pky Bldg VII East-Southeast Far 203,840 100% National Property Holdings Apr-18 Palmer Logistics
*In permitting process

4. 4 Houston Research & Forecast Report | Q3 2017 | Industrial | Colliers International
Q3 2017 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
3Q17 NET
ABSORP-
TION
2Q17 NET
ABSORP-
TION
3Q17
COMPLE-
TIONS
2Q17
COMPLE-
TIONS
SF UNDER
CONSTRUC-
TION
Houston Total 547,370,838 28,495,596 5.2% 1,326,106 0.2% 29,821,702 5.4% 3,035,998 (53,222) 2,542,549 1,442,223 5,291,835
CBD-NW Inner Loop 11,590,397 554,493 4.8% 57,205 0.5% 611,698 5.3% (18,707) (189,169) - - 14,250
Downtown 31,411,129 1,510,562 4.8% - 0.0% 1,510,562 4.8% 241,178 (12,626) - - -
North Inner Loop 4,858,519 300,057 6.2% - 0.0% 300,057 6.2% (76,388) (17,964) - - -
Southwest Inner
Loop
7,097,563 78,940 1.1% - 0.0% 78,940 1.1% (17,499) (28,840) - - -
INNER LOOP
CORRIDOR TOTAL
54,957,608 2,444,052 4.4% 57,205 0.1% 2,501,257 4.6% 128,584 (248,599) - - 14,250
North Fwy/Tomball
Pky
23,738,871 2,428,073 10.2% 53,006 0.2% 2,481,079 10.5% 979,380 169,425 865,800 51,146 913,280
North Hardy Toll Rd 33,565,799 3,110,551 9.3% 270,670 0.8% 3,381,221 10.1% 323,516 (7,912) 10,500 - 93,250
North Outer Loop 20,308,494 995,758 4.9% 48,411 0.2% 1,044,169 5.1% 89,746 (96,798) - 35,000 -
The Woodlands/
Conroe
17,247,084 1,063,878 6.2% 55,566 0.3% 1,119,444 6.5% (75,164) (33,377) - 44,250 78,625
NORTH CORRIDOR
TOTAL
94,860,248 7,598,260 8.0% 427,653 0.5% 8,025,913 8.5% 1,317,478 31,338 876,300 130,396 1,085,155
Northeast Hwy 321 1,298,073 37,700 2.9% - 0.0% 37,700 2.9% - - - - -
Northeast Hwy 90 18,010,800 264,467 1.5% - 0.0% 264,467 1.5% 28,239 15,230 - - 164,500
Northeast I-10 3,853,356 64,325 1.7% - 0.0% 64,325 1.7% 15,496 (15,872) - - -
Northeast Inner Loop 11,559,550 411,640 3.6% - 0.0% 411,640 3.6% (17,461) (36,532) - - -
NORTHEAST
CORRIDOR TOTAL
34,721,779 778,132 2.2% - 0.0% 778,132 2.2% 26,274 (37,174) - - 164,500
Hwy 290/Tomball Pky 21,172,066 996,867 4.7% 245,319 1.2% 1,242,186 5.9% 628,322 244,891 - - 30,300
Northwest Hwy 6 9,571,803 453,764 4.7% - 0.0% 453,764 4.7% 38,809 (202,594) - 10,000 172,885
Northwest Inner Loop 59,999,793 2,795,685 4.7% 130,183 0.2% 2,925,868 4.9% (322,315) (238,097) - - 19,000
Northwest Near 17,909,297 618,054 3.5% 11,479 0.1% 629,533 3.5% (89,229) 174,739 - - 154,661
Northwest Outlier 21,826,504 1,129,981 5.2% 24,205 0.1% 1,154,186 5.3% 1,150,770 333,669 983,750 103,040 1,035,319
West Outer Loop 25,483,643 1,471,159 5.8% 199,538 0.8% 1,670,697 6.6% (242,093) (270,196) - 17,000 496,542
NORTHWEST
CORRIDOR TOTAL 155,963,106
7,465,510 4.8% 610,724 0.4% 8,076,234 5.2% 1,164,264 42,412 983,750 130,040 1,908,707
South Highway 35 34,238,534 980,735 2.9% - 0.0% 980,735 2.9% 8,379 (11,592) 41,520 - 97,593
South Inner Loop 12,368,001 553,399 4.5% 8,167 0.1% 561,566 4.5% 9,833 (116,952) - - -
SOUTH CORRIDOR
TOTAL
46,606,535 1,534,134 3.3% 8,167 0.0% 1,542,301 3.3% 18,212 (128,544) 41,520 - 97,593
East I-10 Outer Loop 12,923,577 88,866 0.7% - 0.0% 88,866 0.7% - (12,166) - - -
East-Southeast Far 60,285,414 3,817,886 6.3% 36,550 0.1% 3,854,436 6.4% 574,303 215,886 428,479 1,128,287 1,921,508
Southeast Outer Loop 17,186,203 438,533 2.6% 15,000 0.1% 453,533 2.6% 93,176 (30,600) - - -
SOUTHEAST
CORRIDOR TOTAL
90,395,194 4,345,285 4.8% 51,550 0.1% 4,396,835 4.9% 667,479 173,120 428,479 1,128,287 1,921,508
Highway 59/Highway
90
22,606,039 1,566,381 6.9% 155,464 0.7% 1,721,845 7.6% (120,592) 60,931 - - -
Southwest Far 12,660,888 1,150,880 9.1% 1,000 0.0% 1,151,880 9.1% 229,457 70,675 212,500 10,500 81,372
Southwest Outer
Loop
13,340,177 781,420 5.9% 6,000 0.0% 787,420 5.9% (179,168) (33,343) - - -
Sugar Land/Ft Bend
Co
21,259,264 831,542 3.9% 8,343 0.0% 839,885 4.0% (215,990) 15,962 - 43,000 18,750
SOUTHWEST
CORRIDOR TOTAL
69,866,368 4,330,223 6.2% 170,807 0.2% 4,501,030 6.4% (286,293) 114,225 212,500 53,500 100,122
Market Summary

5. 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
000 Address, Suite #
000 Address, Suite #
+1 000 000 0000
colliers.com/<<market>>
5 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2017 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
Q3 Houston Industrial 2017 Highlights
Photo source: porthouston.com