EXECUTIVE SUMMARY: Small-Bay Outperformance
The project at 13101 Kathy Ln is strategically located in the Northwest Hwy 6 Submarket, which is demonstrating resilience and premium performance, specifically within the tight *small-bay industrial* segment (under 12,000 SF). This asset class continues to outperform the overall Houston market, characterized by lower vacancy and higher rent growth, mitigating risk associated with large-scale bulk delivery seen elsewhere in the metro.
National Small-Bay Vacancy
Tight national fundamentals drive pricing power.
Average NNN Lease Comp Rate (Annual)
Reflects demand for modern, small-bay units.
Average New Sale Comp Price
New construction is highly valued in the submarket.
MARKET STRENGTH: Why Northwest Flex Outperforms
While Houston's overall industrial sector deals with oversupply—with vacancy hitting 7.3%—the targeted small-bay sector remains protected. The Northwest Hwy 6 Submarket commands premium rates and shows a clear distinction between the high volume of bulk space under construction and the scarce, high-quality flex units that quickly lease up.
Vacancy Comparison (Overall Industrial)
This bar chart illustrates the tight small-bay vacancy against the overall Houston market, highlighting the target segment's supply protection.
Key Houston Economic Indicators (YOY % Growth)
Strong job growth in key flex-using sectors (Financial, Leisure, Trade/Transport) supports continued demand from small and medium enterprises.
RENTAL TRENDS & VALUE PROPOSITION
The NW Hwy 6 corridor justifies a rent premium due to its accessibility and new stock quality. Current market comps confirm the ability to achieve annual NNN rents up to **$16.15/SF** for premium small-bay space, creating strong leasing spreads against the Houston metro average of $10.52/SF.
Northwest Hwy 6 Rental Premium
Comparison of blended asking rents shows the Northwest corridor commands a higher value, reflecting tenant preference for this specific geographic area and property type.
Construction Activity (5-Mile Radius)
Total square footage currently under construction within 5 miles of 13101 Kathy Ln:
Low Risk Factor:
Only 20.3% of this immediate pipeline is currently pre-leased, but this is overwhelmingly skewed toward larger bulk facilities, leaving minimal direct competition for the small-bay product.
PROJECT VALUE: Submarket Lease & Sale Comparables
The following tables present the most recent and relevant transaction data for high-quality, small-bay industrial properties within the immediate vicinity, confirming the achievable lease rates and sale valuations for the new development.
| Property | Size (SF) | Year Built | Rate ($/SF/Yr NNN) |
|---|---|---|---|
| 16910 Telge Rd (Bldg 4) | 3,920 | 2024 | $15.00 |
| 13380 Telge Rd (Bldg 8) | 500 | 2021 | $12.00 |
| 18823 Hamish Rd (Bldg 4) | 450 | 2024 | $10.80 |
| 18807 Hamish Rd (Bldg 2) | 3,000 | 2020 | $10.56 |
| 16103 Grant Rd (H) | 4,000 | 2017 | $10.20 |
Conclusion: New, units under 2000SF demand the highest rates, with the top of the market hitting $1.00/SF/MO NNN shell.
| Property | Size (SF) | Year Built | Price ($/SF) |
|---|---|---|---|
| 11002 Sleepy Hollow Rd | 9,200 | 2024 | $169 |
| 12242 Cutten Rd | 9,985 | 2018 | $159 |
| 6334 Theall Rd (Bldg 6) | 6,300 | 2024 | $159 |
| 22820 Hufsmith Rd | 7,000 | 2024 | $157 |
| 17818 Grant Rd (Older/Larger) | 18,000 | 2000 | $197 |
Conclusion: New construction small-bay assets consistently trade in the $157-$169/SF range.
INVESTMENT OUTLOOK: Low Supply, High Value
The proposed industrial-flex project at 13101 Kathy Ln is positioned in the "sweet spot" of the Houston industrial cycle: benefiting from the strong local economy while mitigating the risk of bulk distribution oversupply.
- **Resilience:** Small-bay properties offer insulation from the high overall Houston vacancy rate (7.3%).
- **Rent Growth:** The submarket's 3.5% YOY rent growth is expected to continue for high-demand, small-footprint properties due to low turn-key supply.
- **Proven Value:** Direct comparables validate the target rent and sale price per square foot, confirming robust capital interest in new, quality product in this corridor.