CONCRETE, CRANES & CAPITAL: HOUSTON’S INDUSTRIAL SCENE IN 2025
May 2025 | Mary Doetterl, Research Manager, Lee & Associates – Houston
Houston’s industrial market remains a powerhouse in 2025, with a 5.6% vacancy rate that showcases the strength of demand despite economic shifts.
While new deliveries continue, there’s a marked shift in tenant behavior. Companies are prioritizing efficiency over sheer square footage, with a strong preference for Class A spaces equipped with the latest features — like higher clear heights, ample trailer parking, and immediate access to key logistics corridors.
What’s driving this? Supply chain optimization and labor access are top of mind for users, especially in critical submarkets like the Northwest and Southeast. As a result, leasing activity remains strong, even with a growing inventory of available space.
Q1 2025 stats from Lee & Associates reveal strong market momentum:
- Leasing Activity: 5.1 million square feet
- Net Absorption: 4.1 million square feet
- Deliveries: 4.7 million square feet
- Construction Pipeline: 15.2 million square feet under construction, set to deliver by the end of the year.
Q1 2025 Houston Asking & Vacancy Rates
Construction activity remains robust in Houston, but developers are adjusting to rising costs and market shifts. With 15.2 million square feet of space under construction set to deliver by the end of 2025, speculative development is still active. Many tenants are seeking tailored spaces that meet specific operational needs, especially in key logistics hubs. Developers are increasingly focused on accommodating these custom requirements while mitigating risk in a tightening capital market.
In the capital markets, Houston continues to attract investors, though pricing has adjusted. While institutional buyers remain active, they’re increasingly selective, focusing on long-term value and operational flexibility. A growing trend is developers selling properties directly to owner-users, who often match or even exceed the prices offered by traditional investors. Many businesses now view property ownership as a strategic hedge against inflation, seeking stability and control over leasing costs.
2025 marks a year of evolution. The focus is no longer just on volume but on delivering smart spaces that align with tenant needs, sustainability goals, and logistics efficiency.
Port 99 is a premier 1.28 million square foot industrial distribution hub at the gateway to Port Houston, delivered in Q3 2024 by Provident Realty Advisors. Leasing activity is led by Justin Tunnell and Richard Glass of Lee & Associates.
About Lee & Associates – Houston
Lee & Associates – Houston is a fully-integrated commercial real estate company with unrivaled market knowledge and an unwavering commitment to integrity and excellence. Our business-minded brokers specialize in office, industrial, and land real estate investments. Lee & Associates – Houston is part of a nationwide network of brokers in more than 80 offices in North America. The brokerage is uniquely qualified to support our client’s real estate needs in Houston, across Texas, and throughout the US. For more information, visit lee-associates.com/houston.