63 Houston Warehouses Rising as Industrial Market Heats Up
Bob Berry
HOUSTON – Warehouse construction in Houston is accelerating as strong job growth, rising oil prices and the city’s development as a major distribution hub are energizing the industrial real estate market.
According to a new report from Avison Young, 63 major industrial buildings are currently under construction, with additional projects in the pipeline.
“Several large projects are scheduled to break ground in the fourth quarter, with 10.3 million square feet currently underway,” Avison Young reported. More than 9 million square feet of industrial space has already been completed so far in 2018, making this one of the strongest — if not the strongest — years for industrial construction in Houston.
E-commerce tenants are driving development in the north and northwest submarkets, while demand from the petrochemical and energy industries is concentrated near Port Houston.
“With the energy sector on a renewed growth path, the industrial market will continue to exert a significant influence on the Houston economy,” said Bob Berry, principal at Avison Young. Houston has added about 128,700 new jobs over the past 12 months.
The robust industrial market has attracted investor interest across a range of capital sources.
Mark Sikes
“Demand and activity in the industrial sector have been exceptionally strong, and that strength is reflected in the valuation of distribution buildings and other industrial properties across the Houston area,” said Mark Sikes, principal with valuation firm Deal Sikes. “New industrial buildings have leased quickly and vacancy rates remain relatively low. Those solid fundamentals support the recent upward movement in reported sales prices.”
Port Houston leads the nation in foreign tonnage and has climbed to fifth in container shipping, according to port and JOC Piers data. In the first half of the year, Trans-Pacific imports at Port Houston rose 24 percent as improved port infrastructure and expanded Panama Canal access facilitated additional imports.
Build-to-suit development is particularly active near the Port, including two new 500,000-square-foot projects at Cedar Port Industrial Park for Vinmar International and another for Plastic Bagging and Packing.
Construction is also driven by big-box retailers such as Best Buy (550,000 square feet) and Conn’s HomePlus (656,658 square feet). E-commerce growth is creating strong demand for last-mile distribution facilities located for rapid consumer delivery.
Other notable industrial and distribution projects in the market include the following (Source: Avison Young):
Clay Development and Construction: Spec 349,400 SF Cedar Port IV in Baytown. Delivery: Summer 2019.
Clay Development and Construction: Spec 214,300 SF Sheldon Business Park. Delivery: Spring 2019.
Crow Holdings: Spec Layne Crossing development with six buildings totaling 530,000 SF in Greens Crossing Business Park in North Houston.
Hines: Spec Pintail Industrial Park in West Houston. 1.5 million SF.
Hines: Spec Grand National Business Park at Beltway 8 and Gessner in Northwest Houston. 107 acres.
Triten Real Estate Partners and Carlyle Group: Spec 414,160 SF distribution space at 4600 Underwood.
Triten Real Estate Partners: Two buildings totaling 330,000 SF in Bayport North Logistics Center. Delivery: early 2019.
Wolff Cos.: 230-acre mixed-use site at Waller County, Highway 290 and FM 362, planned for industrial and related uses.
