Demand
Houston's industrial leasing activity surged to 14.6 million square feet (msf) in Q3 2026, up 66.3% quarter-over-quarter (QOQ) and 31.3% year-over-year (YOY). The quarter marked the highest volume since Q1 2022 and far exceeded the 8.8 msf quarterly average recorded since 2023. Year-to-date (YTD) leasing reached 32.7 msf, nearly matching the 33.8 msf leased in all of 2025, putting 2026 on pace to post the market's strongest annual total since 2022.
While lease count slipped to 133 from 137 in Q2 2026, the decline reflected a higher proportion of larger deals rather than a pullback in demand. Twenty leases of 250,000 square feet (sf) or more were signed during Q3, compared with ten in Q2, together accounting for nearly 65.9% of total volume. Tesla's 1.2 msf lease at Cedar Port Industrial Park, Enchanted Rock's 648,720 sf at Generation Park and Spike Electric & Controls' 642,994 sf at Bayport South Business Park headlined the quarter, reflecting a wave of manufacturing, energy and electronics users committing to large footprints. The Southeast (4.1 msf), Northwest (3.8 msf) and North (2.7 msf) submarkets led all leasing activity, the same three corridors that have absorbed the bulk of this year's new completions.
Net absorption totaled 7.3 msf in Q3 2026, the strongest quarterly figure since Q2 2022, lifting the YTD total to 18.6 msf. With one quarter remaining, 2026 net absorption has already surpassed the 13.1 msf recorded in all of 2025 by more than 41.8%. The Southeast led the market with 2.8 msf of net occupancy gains, followed by the Northwest and Southwest, which recorded 1.5 msf and 912,000 sf, respectively. Net absorption has now increased for three consecutive quarters, with tenants occupying space nearly as quickly as developers complete it and vacancy holding steady despite elevated completions.
Supply
Houston's construction pipeline eased to 19.6 msf under construction in Q3 2026, down from 23.0 msf in Q2 but still well above the 13.3 msf quarterly average recorded in 2024 and 2025. Development remained concentrated in the Northwest (6.3 msf) and North (4.7 msf) markets, which together accounted for 56.2% of space underway. Speculative product comprised 93.9% of the pipeline, though preleasing gained momentum, led by Foxconn's 1.4 msf commitment across three Innerbelt Northwest Logistics buildings.
Construction completions totaled 7.6 msf in Q3 2026, following 8.6 msf in Q2, the first time Houston has posted two consecutive quarters above 7.5 msf since late 2023. YTD completions reached 21.8 msf, already above the 17.0 msf completed in all of 2025. The North (2.2 msf) and Southeast (1.6 msf) markets led in completions, together accounting for 49.4% of the quarterly total. Notable projects underway include Prologis Legacy Point - Building 1 (1.0 msf) in the Northwest and Core5 Logistics Center at Airtex - Building 2 (612,208 sf) in the North.
Overall vacancy held at 6.3% in Q3 2026, unchanged QOQ and up 20 basis points (bps) YOY. Record-pace net absorption kept vacancy in check despite the heaviest YTD completions since 2023, underscoring Houston's capacity to absorb an elevated wave of new supply.
Sublease availability rose to 5.0 msf, or 0.8% of inventory, up from 4.1 msf in Q2 and slightly above the five-year average of 0.7%. ExxonMobil's 525,200-sf block at Houston Tradeport in the Southeast and Marsden Services' 307,400 sf at Port North 59 in the North were the largest offerings. Nearly 62.8% of the total is not yet available for occupancy, limiting near-term pressure on vacancy.
Pricing
Average asking rents closed Q3 2026 at $8.16 per square foot (psf), a record high for the Houston industrial market. The rate marked an increase of 3.8% QOQ and 5.0% YOY, the largest quarterly gain since Q3 2023. The Southwest ($9.28 psf), South ($8.89 psf) and Northwest ($8.72 psf) submarkets commanded the highest rents, while the North (8.2%), Northwest (7.1%) and Northeast (5.7%) posted the strongest annual growth.
In the warehouse/distribution sector, the largest segment of Houston's industrial market, asking rents reached $7.93 psf, up 3.8% QOQ and 4.2% YOY. Rent growth remained firm despite the active delivery pipeline, underscoring sustained tenant demand across Houston.
