Houston Industrial Real Estate Market – View from the Street (Part 2)Posted
On January 29th I posted my opinion of where we are in the Houston industrial real estate market. Since that time, I have been reading about the personnel layoffs (wow!) by the oil and gas service companies. I am really right now “waiting to hear the other shoe drop” regarding how this will affect the commercial real estate market. So far, things have remained stable.
This market is still crazy, probably more from the standpoint of existing single tenant buildings for sale or lease and multi-tenant lease spaces. I have several projects underway right now where my Clients are seeking available properties in both of these categories and here is what I am finding:
- I have carefully, over many years now, kept a database of all available freestanding buildings over 10,000 sf in the Greater Houston area. That database totals 3,750 different buildings at this moment and of those in the database today, 262 buildings are actually available for lease or sale.
- When I go to this database, I can search 30 individual descriptive fields. In about fifteen seconds, I can tell my client what is available and is a perfect fit for his criteria. Of course, even though I have my folks keeping up with database updates daily, we can’t know about ALL of these buildings relative to: deals with offers, properties which have been removed from the market by the owners, etc., so telephone calls are necessary to check that information.
- In my telephone calls, I’m finding that a surprising number of “available” properties in my database either have been leased or sold recently, have been re-occupied by the owner’s business, or have contracts or leases pending.
This phenomenon is relatively new to me and I think is indicative that older properties, priced at less than the new ones, are in great demand today and are being absorbed (occupied) at a higher rate than previously.
Also, when seeking multi-tenant lease space in older existing properties, I find many of the spaces which were previously on the market are getting leased. Not only that but on lease RENEWALS, landlords are being less negotiable on rates.
What this leads me to believe is that our market demand is still strong but pricing drives the deal so older properties are being considered more closely and maybe the newer “image” properties, not so much.
I am certainly aware of the large amount of NEW buildings, both freestanding and multi-tenant out there being offered on the market and the rates need to be high to justify the development costs of these projects.
So, we watch and wait! This is one of the most interesting markets I have seen in the 40+ years I’ve been involved with industrial real estate brokerage in Houston.
… Stay tuned!
Michael Hill Properties offers more than 40 years of experience in brokering commercial industrial properties, such as distribution warehousing and manufacturing, for sale and lease in the Greater Houston Area as well as outside of Houston. For more information on Michael Hill Properties, visit mhprop.com or call (713) 960-6060.