Houston's industrial market is recalibrating in 2026 — vacancy is up, rents are softening, and tenants have more leverage. Here's what you need to know.
Houston's industrial real estate market is at an inflection point. After years of record-breaking growth fueled by e-commerce, port expansion, and explosive population gains, the market is recalibrating in 2026. Whether you're a business owner searching for industrial warehouse space in Houston, an investor evaluating acquisitions in Northwest Houston, or a property owner managing assets in communities like Spring, Cypress, Tomball, or The Woodlands, understanding the current landscape is essential to making the right move.
Here's what the data, backed by boots-on-the-ground experience, tells us right now.
Houston Industrial Market: Key Numbers at a Glance
Before diving into the details, here are the headline figures shaping Houston's commercial real estate market in 2026:
- Total Industrial Inventory: 871 million square feet
- Current Vacancy Rate: 7.3% (up ~100 bps from the 10-year average)
- 12-Month Net Absorption: 15 million SF
- Under Construction: 28.7 million SF
- Market Asking Rent Growth: 0.4% annually (quarterly: -0.3%)
- Annual Sales Volume: $2.2 billion
These numbers point to a market that is still active and fundamentally strong, though supply has gotten ahead of demand in key segments.
Houston's Industrial Market Is Big and Still Growing
Houston's industrial real estate market spans over 871 million square feet across 30 submarkets, making it one of the three largest industrial markets in the United States. The metro's logistics inventory, including warehouses, distribution centers, and fulfillment facilities 100,000 SF and larger, has expanded by more than 30% over the past five years alone.
Nowhere is this growth more visible than in Northwest Houston, where corridors along Hwy 290, the North Freeway (I-45), and Tomball Parkway have seen sustained industrial development driven by population expansion in Spring, Cypress, Tomball, and The Woodlands. These communities have become prime destinations for manufacturers, distributors, and logistics operators looking for affordable land, skilled labor, and quick access to major transportation networks.
What's driving Houston's broader industrial growth? Several structural advantages that aren't going away:
- Port of Houston: One of the busiest ports in the nation by tonnage, serving as a key entry point for goods and a major driver of industrial demand in the southeast submarkets
- Population growth: Houston added 490,000 residents over the past three years, one of the largest gains of any metro in the country. Northwest Houston communities like Cypress, Spring, and Tomball are among the fastest-growing areas
- No state income tax: Texas's business-friendly tax environment continues to attract manufacturers and distribution hubs relocating from higher-cost states
- Strategic location: Quick access to Mexico, two major airports, extensive interstate networks, and robust rail connections make Houston a natural logistics hub
These fundamentals support Houston industrial real estate over the long term, and particularly supports Northwest Houston, where population density and workforce depth continue to grow.
Vacancy Is Rising, But the Story Varies by Location and Building Type
The overall Houston industrial vacancy rate stands at 7.3%, about 100 basis points above the 10-year average. New supply outpaced demand for five consecutive quarters, and the active construction pipeline means vacancy could edge up another 100 basis points by early 2027.
But vacancy is not uniform across the market.
Where vacancy is highest:
- New big-box logistics buildings (100,000+ SF, built since 2023): ~50% vacancy rate among properties in active development corridors
- Southwest Far submarket: above 10%
- Northeast Hwy 90 submarket: 12.4%
- East-Southeast Far (near Port of Houston): 9.8%
Where vacancy is tight:
- North Inner Loop: below 3%
- Small-bay properties (under 25,000 SF) market-wide: ~5%
- Small-bay properties within 10 minutes of Hobby Airport: 3%
- Buildings under 25,000 SF in infill locations, including parts of Spring and Tomball: among the tightest conditions in the metro
If your business needs small-bay industrial space in Spring, Cypress, or Tomball, or if you own well-located, smaller-format product in Northwest Houston. Conditions are considerably tighter than the headline figure suggests. For large-format users or investors in big-box logistics, the market currently favors the tenant or buyer.
The Flight to Quality: Older Buildings Are Losing Ground
One of the most consequential trends in today's Houston industrial market is the widening performance gap between modern and aging facilities.
Large-format tenants, including national retailers, manufacturers, and third-party logistics providers, are choosing newer buildings with 36-foot clear heights, greater power capacity, and efficient dock configurations. Properties built since 2023 absorbed 9.8 million square feet over the past year. Properties built before 2000 recorded negative absorption of 1.6 million square feet over the same period.
This trend is especially relevant in Northwest Houston, where a mix of older industrial stock along legacy corridors and newly built Class A facilities along Hwy 290 and I-45 are competing for the same tenant pool. The rent gap between old and new has narrowed enough that many tenants are choosing to upgrade.
What this means for tenants in Spring, Cypress, and Tomball: If you're currently in an older facility, it's worth modeling whether relocating to newer Northwest Houston warehouse space would offer operational advantages at a cost closer to your current rent than you might expect.
What this means for landlords: If you own older industrial product in the Spring, Cypress, or Tomball area, the competitive landscape requires proactive repositioning. Partnering with an experienced landlord representation team can help you price, market, and structure leases to keep your asset competitive.
Lease Concessions Are Back: What Tenants Can Negotiate Today
The shift in market conditions is showing up in concrete, negotiable terms. Here's what tenants leasing Houston industrial space in Spring, Cypress, Tomball, and The Woodlands are securing in 2026:
Free Rent: Tenants in large logistics spaces (100,000+ SF) are commonly securing four to six months of free rent on five-year terms. In 2022, comparable deals offered zero to one month.
Tenant Improvement Allowances: TI packages for large bulk distribution space are running $6 to $12 per square foot, up 15 to 20% from recent years. Landlords are investing more to attract and retain quality tenants.
Flexible Lease Terms: Five- to ten-year leases remain the norm, but one- to three-year terms for larger occupiers are becoming more common. Some landlords are also offering one-year renewals to maintain occupancy.
Annual Escalations: Fixed annual increases of 3.5% are becoming standard on new long-term leases, down from 4% that was typical during the landlord-favorable market of 2021–2022.
Longer Leases at Renewal: Watch Out. For long-term tenants, renewal negotiations can be a shock. Market rents today are roughly 27% higher than five years ago and more than 40% above levels from a decade ago. Tenants renewing leases in Northwest Houston without professional tenant representation may be leaving significant money on the table.
Rent Trends: Growth Has Stalled, But Not Collapsed
Houston industrial asking rents currently average $0.79/SF across the market, up just 0.4% year-over-year, and actually down slightly on a quarterly basis (-0.3%). This is well below the 2015–2019 annual average of 2.3% growth, and a dramatic deceleration from the 7–9% growth seen in 2022–2023.
By property type:
- Logistics: $0.73/SF (7.8% vacancy)
- Specialized Industrial: $0.92/SF (3.4% vacancy)
- Flex: $1.11/SF (10.7% vacancy)
In Northwest Houston submarkets, including North Fwy/Tomball Pkwy ($0.87/SF) and Hwy 290/Tomball Pkwy ($0.76/SF), rents are broadly in line with the market average, though newer Class A product commands a premium. The Woodlands/Conroe submarket, at $0.99/SF, is the second-highest asking rent of any submarket in the metro.
Big-box logistics rents (250,000+ SF) face the most pressure given the high availability rate and speculative pipeline. Smaller, specialized, and flex industrial properties are holding up better, which is good news for owners of smaller-bay product in Spring, Tomball, and Cypress.
Construction: Northwest Houston Is One of the Hottest Development Corridors
More than 29 million square feet of Houston industrial space broke ground in 2025, the highest annual total since 2022 and roughly 50% above the prior year. As of mid-2026, 28.7 million SF is actively under construction across 418 projects.
Northwest Houston is at the center of this boom. Three of the top ten most active construction submarkets in the metro are in the Northwest corridor:
- North Fwy/Tomball Pkwy (serving Spring and Tomball): 3.67M SF under construction across 92 buildings, the 3rd most active submarket in Houston
- Northwest Hwy 6 (serving Cypress): 3.2M SF under construction across 72 buildings, the 4th most active
- Hwy 290/Tomball Pkwy (serving Cypress and Northwest Houston): 2.59M SF under construction across 10 buildings, with the largest average building size in the metro at 258,811 SF per project
The Woodlands/Conroe submarket has 988,000 SF under construction. Critically, 79% of that pipeline is already pre-leased, the highest pre-leasing rate of any submarket in Houston. This signals genuinely tight conditions and strong underlying demand, not speculative oversupply.
Most construction remains focused on suburban locations with affordable land and strong access to labor and transportation, precisely the profile that Spring, Cypress, Tomball, and The Woodlands fit. Properties near large blue-collar workforce pools are leasing quickly, and several major tenants have pre-leased buildings along the Hwy 290 and I-45 corridors ahead of completion.
Submarket Spotlight: Northwest Houston in Focus
Not all of Houston's industrial submarkets are created equal. Here's a detailed look at the Northwest Houston submarkets Place Realty Partners serves, with broader market context included:
The Woodlands / Conroe Vacancy: 4.5% | 12-Mo Absorption: Modest positive | Under Construction: 988K SF (79% pre-leased) The tightest, most in-demand submarket in Northwest Houston. Nearly 80% of space currently under construction is already committed, the highest pre-leasing rate in the entire metro. Asking rents at $0.99/SF rank second-highest among all Houston submarkets. For businesses seeking industrial space in The Woodlands, options are limited and move quickly. For landlords and investors, this submarket offers some of the strongest fundamentals in the metro.
North Fwy / Tomball Pkwy (Spring & Tomball) Vacancy: 7.5% | 12-Mo Absorption: +5.0% of inventory | Under Construction: 3.67M SF (92 buildings) One of the most active development corridors in Houston, serving the Spring and Tomball industrial markets. Strong absorption of 2.36M SF over the past 12 months reflects genuine tenant demand. Major leases include Panelmatic (728,080 SF) and Discovery SCM (293,280 SF). The construction pipeline is large, but active leasing means new supply is being absorbed at a healthy pace. Asking rents at $0.87/SF are among the higher-end of suburban submarkets. Businesses seeking warehouse space in Tomball or Spring will find a good mix of new Class A product and existing space at competitive rents.
Hwy 290 / Tomball Pkwy (Cypress) Vacancy: 8.5% | 12-Mo Absorption: Negative (-0.3% of inventory) | Under Construction: 2.59M SF (10 buildings) The Cypress industrial market is in a transitional moment. Vacancy has ticked up as large new projects delivered into the submarket, and absorption turned slightly negative over the past year. However, the pipeline features some of the largest buildings under construction anywhere in Houston, averaging over 258,000 SF per project, catering to big-box users. For Cypress businesses and tenants, this environment translates to real negotiating leverage on large spaces. For landlords, professional landlord representation is essential to stand out in a more competitive leasing environment.
Northwest Hwy 6 (Cypress) Vacancy: 9.6% | 12-Mo Absorption: +6.3% of inventory | Under Construction: 3.2M SF (72 buildings) Despite elevated vacancy, Northwest Hwy 6 posted one of the strongest absorption rates of any submarket in the metro over the past 12 months, with 1.69M SF absorbed, driven by large leases including SEG Manufacturing (425,360 SF) and Daikin Comfort Technologies (312,460 SF). This is a market where new supply is being actively absorbed by manufacturing and industrial users. The Cypress corridor along Northwest Hwy 6 continues to attract significant tenant interest, particularly from manufacturers drawn to the area's workforce and infrastructure.
East-Southeast Far Vacancy: 9.8% | 12-Mo Absorption: +2.4% of inventory The largest industrial submarket in Houston by square footage, with heavy new supply concentrated near the Port of Houston. Availability is elevated, giving tenants strong negotiating leverage on large-format space.
North Inner Loop Vacancy: 4.2% | 12-Mo Absorption: Negative (modest) One of the tightest submarkets in the metro. Minimal new supply and dense infill location keep vacancy well below the market average. Limited options for tenants; landlords hold more leverage here.
Sugar Land Vacancy: 7.1% | 12-Mo Absorption: +6.1% of inventory Among the strongest absorption stories in the metro over the past 12 months. Several large move-ins, including Pepsi's 1M+ SF lease at 31270 Kingsland Blvd, have driven significant occupancy gains.
Northeast Hwy 90 Vacancy: 12.4% | 12-Mo Absorption: +1.3% of inventory The highest vacancy of any major submarket in Houston, with 19 buildings currently under construction adding further supply pressure. Tenants have significant leverage; landlords need professional representation to compete.
Near-Term Risks Worth Watching
A complete picture of Houston's industrial real estate outlook requires acknowledging real downside risks:
Trade policy uncertainty: Tariff escalation could suppress import activity through the Port of Houston and slow retailer distribution network expansion, with ripple effects on logistics demand in Northwest Houston.
Slower consumer spending: Inflationary pressure on household incomes could reduce inventory demand and cause tenants to delay expansion decisions.
Supply overhang: With 28.7 million SF under construction and 75% unleased, additional vacancy pressure is the most likely near-term outcome, particularly in the Cypress and Tomball Pkwy corridors.
Recession risk: A mild recession could trigger the first Houston industrial rent decline since 2010, extending the recovery timeline.
Local tenant reps are already noting that deals are taking longer to close and tenants are approaching lease decisions more cautiously. This environment rewards preparation and professional representation.
The Long-Term Case for Houston Industrial, with a Focus on Northwest Houston
Despite near-term headwinds, the structural case for Houston industrial real estate remains strong, and Northwest Houston is particularly well-positioned for the long term:
- Population of approximately 8 million, growing at 1.4% annually, one of the fastest rates of any major U.S. metro
- Spring, Cypress, and Tomball are among the fastest-growing communities in the Houston metro, adding households, workers, and consumer demand that drives industrial activity
- The Woodlands continues to attract corporate relocations and professional employment, sustaining demand for high-quality industrial and flex product
- Third in the nation for Fortune 500 headquarters (26 companies), trailing only New York and Chicago
- Home to the world's largest medical center and NASA's Johnson Space Center
- Port of Houston among the busiest in the U.S. by tonnage
- No corporate or personal state income tax
- Major recent commitments: Eli Lilly's $6.5 billion biomanufacturing plant, Apple's AI server facility, and continued manufacturing investment from companies like Foxconn and Panelmatic, several with operations in Northwest Houston
The market will work through its current supply overhang. Businesses and investors who position thoughtfully in Spring, Cypress, Tomball, and The Woodlands today will be well-placed when the cycle turns.
Work With Place Realty Partners
Navigating Houston's commercial real estate market in 2026, especially in Spring, Cypress, Tomball, and The Woodlands, requires local expertise, current data, and a team that negotiates on your behalf.
At Place Realty Partners, we specialize in commercial and residential real estate across Northwest Houston and the greater Houston metro. Our services include:
- Tenant Representation: Site selection, lease analysis, and negotiation for businesses leasing industrial or commercial space in Spring, Cypress, Tomball, The Woodlands, and beyond
- Landlord Representation: Tenant sourcing, lease structuring, and asset positioning for Northwest Houston property owners
- Investment Advisory: Acquisition, disposition, and portfolio strategy for industrial and commercial investors in the Houston metro
- Buyer & Seller Representation: Full-service representation for commercial property transactions
We serve businesses and investors across Spring, Cypress, Tomball, The Woodlands, Katy, Sugar Land, Pearland, and the broader Houston metro area.
Ready to talk about your next move in Northwest Houston? 📞 (832) 779-2829 📧 info@placerealtypartners.com 🌐 www.placerealtypartners.com/contact
Frequently Asked Questions: Houston Industrial Real Estate 2026
What is the current vacancy rate for Houston industrial space? As of Q2 2026, the overall Houston industrial vacancy rate is 7.3%, about 100 basis points above the 10-year average. Vacancy varies significantly by submarket, ranging from below 3% in infill locations to above 12% in areas with heavy new construction.
Are industrial rents going up or down in Houston? Rent growth has slowed significantly. Market asking rents are growing at just 0.4% annually, and on a quarterly basis rents edged down 0.3%. Large-format logistics rents face the most pressure; smaller and specialized industrial properties are more stable.
How much industrial space is under construction in Houston? Approximately 28.7 million square feet across 418 projects is currently under construction in Houston, placing the market second in the U.S. behind Dallas–Fort Worth. Roughly 75% of this pipeline remains unleased.
Is it a good time to lease industrial space in Spring, Cypress, or Tomball? For businesses needing large-format space along the Hwy 290 or Tomball Pkwy corridors, yes. Concessions including free rent, increased TI packages, and more flexible terms are available. For smaller spaces, the market remains tight with fewer concessions. Contact Place Realty Partners for a current market assessment specific to your needs.
What is the industrial real estate market like in The Woodlands? The Woodlands/Conroe submarket is one of the tightest in all of Houston. Vacancy sits at 4.5%, and 79% of space currently under construction is already pre-leased, the highest pre-leasing rate in the metro. Asking rents at $0.99/SF are the second-highest in Houston. Businesses seeking space here should act quickly and work with a local tenant representative.
Is it a good time to invest in industrial property in Northwest Houston? Northwest Houston, particularly Spring, Tomball, The Woodlands, and Cypress, offers a compelling long-term investment case backed by strong population growth, workforce depth, and transportation access. Near-term, investors should be selective about submarket and building size. Reach out to Place Realty Partners' investment advisory team for a tailored analysis.
Who should I contact for Houston industrial real estate representation in Northwest Houston? Place Realty Partners specializes in commercial real estate across Spring, Cypress, Tomball, The Woodlands, and greater Houston. Contact us at (832) 779-2829, email info@placerealtypartners.com, or visit placerealtypartners.com/contact.