July 18, 2017 10:45 AM, EDT

Houston Warehouse Market Heats Up as Big-Box Distributors Vie for Space

Downtown HoustonKatie Haugland Bowen/Flickr

Nearly a dozen big-box distributors are shopping the Houston area for warehouse space larger than 500,000 square feet, NAI Partners said July 17 in its most recent industrial real estate market report.

The shoppers weren’t named, but news of their interest seems to fulfill the long-touted prognosis that a boom in local distribution networks would bring other big retailers and logistics companies into the Houston area.

Michael Keegan, a partner at NAI, wrote in the quarterly report that most of the big players shopping for warehouse space in Houston have e-commerce in mind and are looking for space near UPS and FedEx shipping hubs.

UPS ranks No. 1 and FedEx No. 2 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

“With the majority of activity driven by online retailers, it’s clear that the phrase ‘e-commerce’ is no longer a buzzword, it’s a movement,” Keegan wrote.

Houston’s industrial real estate market logged its 58th consecutive quarter of growth in Q2 2017, pushed along largely by the shift to e-commerce, as retailers dump storefronts in favor of warehouses and third-party logistics companies flourish in the fertile environment.

Vacancy ticked upward slightly in the latest quarter, up to 5.5% from 5.3% a year before. Absorption remained positive and the construction pipeline slowed.

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