Demand
Houston's industrial leasing activity totaled nearly 8.3 million square feet (msf) in Q2 2026, in line with the market's 8.3 msf quarterly average since 2023. The Northwest (2.0 msf), South (1.6 msf), and North (1.4 msf) submarkets led all leasing activity, together accounting for more than 60.0% of the overall leasing volume during the quarter. YTD leasing reached 17.4 msf, up 17.2% from the same period in 2025, highlighting sustained occupier demand across Houston's primary distribution corridors and supporting continued leasing momentum through the remainder of 2026.
The North, South, and Southwest submarkets each recorded a notable increase in leasing volume quarter-over-quarter (QOQ). Much of the North's demand stemmed from a large number of midsize and smaller deals rather than a single large transaction, while gains in the South and Southwest were driven largely by two multi-building deals: TAS Energy's three-building lease at Carson 288 in the South and Applied Optoelectronics' expansion across three buildings at Hightower Business Park in the Southwest.
Net absorption totaled 6.7 msf in Q2 2026, bringing the YTD total to 11.9 msf, more than triple the 3.7 msf recorded through the first half of 2025 and Houston's strongest first-half performance in three years. The pace of net occupancy gains has accelerated, reinforcing market fundamentals and helping mitigate upward pressure on vacancy despite robust construction completions.
The Northwest submarket led the market with roughly 2.5 msf of net absorption during the quarter, bringing the YTD total to just over 3.6 msf. The Southwest and North submarkets also posted solid occupancy gains, each recording 1.8 msf through the first half of 2026. Together, the Northwest, Southwest, and North submarkets accounted for more than half of Houston's first-half absorption, underscoring their role as primary drivers of market expansion.
Supply
Houston's industrial pipeline remained elevated in Q2 2026 at 23.0 msf under construction. While activity moderated from the prior quarter, it remained substantially above the 13.3 msf quarterly average recorded in 2024 and 2025. Construction activity was concentrated in the North (6.2 msf) and Northwest (5.9 msf) submarkets, which together accounted for more than half of all space underway. Speculative development continued to dominate the pipeline, comprising more than 93.0% of construction activity and reflecting developer confidence in the market's ability to absorb future deliveries.
Delivery volume was similarly active, with 8.6 msf completed in Q2 2026, marking Houston's strongest quarter for new supply since 2023 and lifting YTD completions to 14.3 msf. Notable completions included Prologis Legacy Point Building 1 (1.0 msf) and Innerbelt Northwest Logistics Building 5 (955,460 square feet (sf)), both located in the Northwest-Far submarket.
Overall vacancy increased to 6.3% in Q2 2026, up 30 basis points QOQ but unchanged year-over-year (YOY). While new deliveries outpaced absorption in several submarkets during the quarter, vacancy held within its recent range, reflecting Houston's capacity to absorb a sizable volume of newly delivered space.
Sublease availability held steady at 4.5 msf, or 0.7% of the total inventory, in line with the market's five-year average. The largest blocks currently available included Palmer Logistics (312,000 sf) in the Northeast and Marsden Services (307,000 sf) in the North. Limited sublease availability suggests occupiers remain committed to their existing footprints.
Pricing
Average asking rents closed Q2 2026 at $7.87 per square foot (psf), up 2.2% QOQ and 5.0% YOY. The South ($9.24 psf), West ($8.99 psf), and Southwest ($8.57 psf) submarkets continued to command the highest asking rents in the market. The South (16.7%), West (15.7%), and North (12.0%) posted the strongest annual rent growth, helping sustain citywide rent gains despite a steady flow of new supply.
In the warehouse/distribution sector, the largest segment of Houston's industrial market, asking rents closed Q2 2026 at $7.67 psf, up 2.5% QOQ and 3.9% YOY. Despite a steady stream of new deliveries, rent growth remained positive, underscoring the resilience of tenant demand across Houston.
