Houston Snags First Distribution Lease Over 1M SF Since 2022
A national logistics firm signed a 1.2M SF lease at a speculative project in Conroe, the first time Houston has seen a 1M SF distribution or warehouse lease since a boom that ended two years ago.
BroadRange Logistics signed the lease for its distribution center in the largest building at Conroe Park North, the Houston Chronicle reported. Houston’s Lovett Industrial and Chicago-based Cresset Partners developed the building as a speculative warehouse in the 1,655-acre industrial park.
The lease brings Houston out of a 1M SF-plus industrial lease slump it entered last year. Houston saw six industrial leases of that size in 2022, then none in 2023, Bisnow previously reported. The trend mirrored a national slowdown, with 63 deals over 1M SF in 2022 and 43 in 2023.
The only other industrial lease of this scale signed all year was a data center’s sublease of a 1.2M SF building once slated to become a distribution center for online furniture retailer Wayfair, the Chronicle reported. Wayfair abandoned its plans to occupy the building while it was under construction in early 2023, citing “a change in our business practices.”
There are still four 1M SF-plus warehouses that are vacant in the Houston area, the Chronicle reported, citing CoStar data. Yet industrial absorption remains strong and construction is down, pushing vacancy down slightly, according to CBRE’s second-quarter report.
There was 11.2M SF of industrial space under construction at the end of 2022, a 49% drop from a year earlier, the report shows. The market saw 5.8M SF of absorption during the quarter, pushing the vacancy rate down 10 basis points to 6.2%.
Lovett CEO Charlie Meyer told the Houston Chronicle that he is confident about continued industrial absorption.
“I think Houston has been a market where the euphoria can take hold and you can see a lot of new projects happening at the same time and you become worried, but I’m not concerned about that at this point in time,” Meyer told the outlet. “I think there is going to be enough tenant demand to satisfy whatever comes.”
BroadRange Logistics has begun moving in, the Chronicle reported. Strategic Real Estate Partners represented the tenant, and CBRE represented Lovett.
