Houston
Total Stock (million sq. ft.)
517.6
Vacancy Rate:
5.1%
Availability Rate:
7.6%
NNN Lease Rate:
$4.92
Net Absorption (million sq. ft.):
2.4
517.6
Vacancy Rate:
5.1%
Availability Rate:
7.6%
NNN Lease Rate:
$4.92
Net Absorption (million sq. ft.):
2.4
*The NNN lease rate is displayed on a per sq. ft. per annum basis consistent with the U.S. Industrial & Logistics Quarterly Figure reports.
Metro Area Population
6.9 million
Unemployment Rate
4.4%
Annual Salary - Warehouse
$27,643
% of Pop - Associate Degree and Below
67.4%
% of Pop - Bachelor's Degree and Above
32.7%
6.9 million
Unemployment Rate
4.4%
Annual Salary - Warehouse
$27,643
% of Pop - Associate Degree and Below
67.4%
% of Pop - Bachelor's Degree and Above
32.7%
Airport
George Bush Intercontinental Airport
Total Cargo (millions of U.S. tons)
0.42
Seaport
Port of Houston
TEU Volume - 2017 (millions)
2.40
Major Highways
I-10, I-45, Hwy 288, Hwy 6, Bltwy 8, I-610, Hwy 59
Number of Intermodal Rail Hubs
5
Number of Class I Rail Lines
2
What is the term of a typical lease?
4-5 years
How is the rent quoted?
NNN Monthly
What is the tenant's option for termination or break?
Negotiable, if a termination option was included in the lease agreement and the tenant must give 90-120 days’ notice.
Does the tenant have the option to renew? What is the length of the typical option?
Yes, the tenant has a right to renew with an average length of 3-5 years depending on contract options.
How is the rent determined at renewal?
Typically, rents are determined by market rent at renewal and are generally negotiated 3-6 months in advance of lease expiration.
What is the typical rent-free period, if any?
Usually a rent-free period of 1-2 months for a 4-5 year lease
What is the typical rent escalation?
Annual bump of 2%-3%, on average.
Does the tenant have the right to sublet?
Yes, as long as landlord agrees and sublessee has similar credit.
4-5 years
How is the rent quoted?
NNN Monthly
What is the tenant's option for termination or break?
Negotiable, if a termination option was included in the lease agreement and the tenant must give 90-120 days’ notice.
Does the tenant have the option to renew? What is the length of the typical option?
Yes, the tenant has a right to renew with an average length of 3-5 years depending on contract options.
How is the rent determined at renewal?
Typically, rents are determined by market rent at renewal and are generally negotiated 3-6 months in advance of lease expiration.
What is the typical rent-free period, if any?
Usually a rent-free period of 1-2 months for a 4-5 year lease
What is the typical rent escalation?
Annual bump of 2%-3%, on average.
Does the tenant have the right to sublet?
Yes, as long as landlord agrees and sublessee has similar credit.
What is the unit of measurement of a typical lease?
Per sq. ft. per month
Does the leasable area include the common area?
No
Per sq. ft. per month
Does the leasable area include the common area?
No
What is the average rent for a warehouse greater than 50K sq. ft.?
$0.40 per sq. ft. per month
What is the average rent for a manufacturing facility greater than 50K sq. ft.?
$0.46 per sq. ft. per month
Is there a rent review during the lease?
Yes (depends on landlord)
What are the average service charges (OPEX)?
Approx. $2.52 per sq. ft. per year
Who is responsible for the service charges?
Tenant
What are the average taxes paid on the lease?
$1.50-$2.00 per sq. ft. per year
Who is responsible for the property taxes?
Tenant
Who is responsible for the utilities?
Tenant
Who is responsible for the fit-out costs, if any?
Landlord Negotiable, landlord pays up to agreed T.I., tenant pays the rest
What is the typical security deposit?
1 month gross last month's rent for lease/pre-lease, case-by-case basis for build-to-suits.
How is car/truck parking paid?
Usually included in rent
Any other occupancy costs?
Tenants residing in industrial parks pay processing fees for wastewater treatment.
$0.40 per sq. ft. per month
What is the average rent for a manufacturing facility greater than 50K sq. ft.?
$0.46 per sq. ft. per month
Is there a rent review during the lease?
Yes (depends on landlord)
What are the average service charges (OPEX)?
Approx. $2.52 per sq. ft. per year
Who is responsible for the service charges?
Tenant
What are the average taxes paid on the lease?
$1.50-$2.00 per sq. ft. per year
Who is responsible for the property taxes?
Tenant
Who is responsible for the utilities?
Tenant
Who is responsible for the fit-out costs, if any?
Landlord Negotiable, landlord pays up to agreed T.I., tenant pays the rest
What is the typical security deposit?
1 month gross last month's rent for lease/pre-lease, case-by-case basis for build-to-suits.
How is car/truck parking paid?
Usually included in rent
Any other occupancy costs?
Tenants residing in industrial parks pay processing fees for wastewater treatment.
What are typical agency fees? Who pays them?
6% agency fee, split 4% to tenant rep and 2% to landlord rep, paid by landlord.
Who is responsible for legal fees?
Each party is responsible for their own legal fees.
Any other transaction costs?
Legal costs, architectural and engineering costs.
6% agency fee, split 4% to tenant rep and 2% to landlord rep, paid by landlord.
Who is responsible for legal fees?
Each party is responsible for their own legal fees.
Any other transaction costs?
Legal costs, architectural and engineering costs.
What is the typical land tenure?
Leasehold with at most 50 years of tenure.
What is the terminology of the purchase agreement?
Purchase and Sale Agreement
What is the average cost?
Warehouse: $50-$80 per sq. ft.
Manufacturing: $50-$80 per sq. ft.
What is the agency fee and who pays?
3%-6% paid by seller
What is the typical LTV?
60%-75%
What is the average borrowing rate?
4.5%-5%
What is the mode of payment?
Paid by buyer after closing.
What are the average transaction (closing) costs?
Transfer tax of 1%-2% plus attorney, title fees and commissions of 0.5% - 6%.
Leasehold with at most 50 years of tenure.
What is the terminology of the purchase agreement?
Purchase and Sale Agreement
What is the average cost?
Warehouse: $50-$80 per sq. ft.
Manufacturing: $50-$80 per sq. ft.
What is the agency fee and who pays?
3%-6% paid by seller
What is the typical LTV?
60%-75%
What is the average borrowing rate?
4.5%-5%
What is the mode of payment?
Paid by buyer after closing.
What are the average transaction (closing) costs?
Transfer tax of 1%-2% plus attorney, title fees and commissions of 0.5% - 6%.
What is the average clear ceiling height?
28' - 32'
Average number of dock doors?
50-100
Typical column spacing?
50' x 50'
Average parking ratio?
0.70 / 1,000 sq. ft.
Sprinkler system?
ESFR Sprinkler system
What is the typical power supply?
3,000 amps 3 phase Heavy
28' - 32'
Average number of dock doors?
50-100
Typical column spacing?
50' x 50'
Average parking ratio?
0.70 / 1,000 sq. ft.
Sprinkler system?
ESFR Sprinkler system
What is the typical power supply?
3,000 amps 3 phase Heavy
CBRE Americas Industrial & Logistics Occupier Guide