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Expert Advice for Buying Warehouses for Sale in Houston

Published: 08-15-23 Category: Buying

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Houston has one of the nation's fastest-growing and most dynamic industrial markets, with 4% annualized growth from 2020 to 2023.

Whether you're a business owner looking for storage and workspace or you want to invest in warehouse space to diversify your commercial real estate portfolio, buying warehouses for sale in Houston can be a profitable decision.

However, you should know a few things first before committing to the sale. Read on for some expert advice on buying warehouse property in Houston.

Warehouse Zoning in Houston

Expert Advice for Buying Warehouses for Sale in Houston

Unlike many other major metropolitan areas, Houston doesn't have citywide zoning ordinances. This means that there are no general zoning regulations that restrict where industrial real estate can be. Instead, city ordinances subdivide land based on neighborhoods and regions.

From the perspective of buying a warehouse, this means a few things. First, Houston's jumble of zoning-less properties means warehouses can often be located in the same area as residential properties. You need to be aware of any kinds of local ordinances that might restrict how you can use the warehouse you buy.

Warehouse Location in Houston

Houston has a large and complex highway system that surrounds the city in a series of rings. The most significant types of industrial activity in the city take place in the corridors that line these interstates because that location provides quick transportation to the rest of Houston.

Whether you're buying large or small warehouses for sale in Houston, you'll want to look at properties that line the interstate corridors. For example, the Northwest Corridor region in Houston that lines Hwy 6 and Tomball Pkwy has delivered over 4.8 million square feet of industrial space in 2023 alone.

Environmental Hazards in Houston

Houston has a high degree of industrial activity, and the lack of zoning means that ground pollution can spread across the city. In some cases, pollution can contaminate properties, making them unsafe to manage and operate.

The lack of zoning regulations for Houston commercial real estate means that warehouse buyers need to be extra diligent about assessing the environmental history of their properties.

The last thing you'll want to end up doing is buying a warehouse on land that has industrial contamination: You'll be on the hook for cleaning it up.

Should I Rent or Buy a Warehouse in Houston?

Renting and buying are the two main options for finding warehouse space for businesses. Both have their advantages and disadvantages.

Renting offers more flexibility and mobility. You can break a lease without too much hassle if your business plans change unexpectedly. A small business, for example, may favor the flexibility of leasing over the commitment of buying.

Conversely, buying gives you complete control over the property. You can modify it to fit your operations and can hold onto it as a valuable business asset. The trade-off is the legal and financial commitment to buying industrial property.

How Much Does a Warehouse for Sale in Houston Cost to Buy?

The average cost for flex industrial space in Houston is approximately $2,320,454 for an average price of $73.04 per square foot.

The median cost of warehouses for sale in Houston is $1,250,000, with a median price per square foot of $81.82. The median and average price per square foot for flex industrial space grew by 5.3% and 3.1% over the past quarter.

How Much Does a Warehouse for Lease in Houston Cost to Rent?

Average rental rates for industrial property in Houston rose 4% quarter-over-quarter to $0.74 per square foot in Q1 2023. Rents are highest in the Southeast and Southwest submarkets at $0.85 per square foot due to their proximity to Houston's harbor district and all its shipping activity.

Among warehouses for sale in Houston, flex industrial space has the highest rental rates driven by demand for flexible, multi-purpose space. Flex industrial space fetches a high price because it has several desirable features, like storage space and separate office spaces.

What's the Current State of the Houston Warehouse Market?

Houston's warehouse market is strong, with industrial construction high and vacancy rates low. Houston has one of the strongest warehouse markets in the country and has experienced the highest industrial growth out of any city in the US in the past decade.

Houston's industrial real estate market started to slow slightly during the back half of 2022 but has maintained positive momentum into the first half of 2023. The construction pipeline is strong, with over 370 million square feet of new space under construction.

Is Buying a Warehouse for Sale in Houston a Good Idea?

Yes, buying warehouses for sale in Houston can be an excellent idea. Houston is currently undergoing one of the fastest commercial real estate growth spurts in the nation and has quickly cemented itself as an industrial and retail real estate powerhouse. The impressive performance from last year has leveled off, but market fundamentals are incredibly strong.

Houston is a great place to buy a warehouse for business purposes thanks to the city's large consumer base and employment options. Land is relatively cheap in Houston compared to many other major cities, and Houston's business-friendly tax policies make it a great place for entrepreneurs.

Ultimately, from an investor perspective, a Houston warehouse can be an excellent addition to a real estate portfolio. Industrial rents and prices in Houston continue to rise and recent market data suggests that Houston industrial real estate will continue to grow in the foreseeable future.

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