Northwest Houston Industrial Market Report
Houston Northwest Inner Loop Submarket Overview
The Northwest Inner Loop submarket stands as Houston’s second-largest industrial submarket, boasting 63.7 million square feet of inventory, strategically positioned near the 610 Loop urban core, and accessible via major highways like I-10 and Beltway 8. Despite challenges such as expensive land and limited space availability, it hosts a diverse mix of manufacturing tenants serving industries like oil and gas, aerospace, and consumer goods. While negative absorption has been observed over the past decade, often due to demolitions rather than move-outs, the submarket maintains a steady vacancy rate, with smaller properties driving much of the industrial demand, reflecting the area’s resilience and ongoing appeal to various businesses.
Houston Northwest Inner Loop Submarket Performance
Rent growth in the Northwest Inner Loop submarket stands at 4.1%, which is below the national average of 5.3%, largely due to ample land and minimal zoning restrictions that historically kept occupancy rates and rent growth lower than the U.S. average. However, transaction activity has slowed recently due to elevated borrowing costs, stricter lending requirements, and tighter underwriting standards, with private capital dominating trades. The area is densely populated, offering a large pool of potential workers for local employers, with H-E-B dominating over 1.3 million square feet of space. Despite some recent demolitions causing a slight uptick in vacancy rates to 5.5%, the submarket’s current vacancy rate remains consistent with its 10-year average.
Investors favor the submarket for its well-located, urban infill, last-mile logistics properties, with an average of 110 transactions annually over the past five years.
By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 6.3%
- Rent Growth: 3.7%
- Deliveries SF: 826K
Houston West Outer Loop Submarket Overview
The West Outer Loop submarket is one of Houston’s larger industrial areas. While predominantly comprised of smaller, older properties, recent years have seen an increase in larger developments. Major occupiers include companies in the manufacturing and food and beverage distribution sectors, with recent leases exceeding 150,000 square feet each by manufacturers like Cooler Depot and Daikin Comfort Technologies Manufacturing. While the submarket is facing challenges with rising vacancies, the shift towards larger properties and the sustained interest from key industries signal a resilient market poised for continued adaptation and growth.
Houston West Outer Loop Submarket Performance
The submarket encompasses 33.6 million square feet of inventory, primarily located along Sam Houston Tollway and Highway 290, offering convenient transportation access. The vacancy rate reached 6.3% in Q1 2024, the highest since 2011, although construction starts have slowed, mitigating supply-side risks. Rent growth is at 3.7%, with asking rents of $9.10 per square foot. There is an abundance of smaller, older properties, with an average size of around 35,000 square feet and an age exceeding 30 years. However, this trend is gradually evolving. Approximately 25% of recently completed properties over the last three years have surpassed 100,000 square feet in size. The West Outer Loop is showing itself as an emerging investment opportunity, with 25 transactions in the past year.
