HOUSTON – (By Michelle Leigh Smith) – Work has begun to clear land for one of the largest warehouse and job-creation projects in the Houston area in 2017: a 1 million square-foot Amazon distribution center in Katy, according to Chris Caudill of NAI Partners.
The new Amazon facility will employ roughly 1,000 people who will process, sort and manage products and packages for shipment across the region.
For Caudill, the site — located north of Interstate 10 near Woods Road — has special significance. He remembers growing up hunting ducks and geese in the rice fields there, about 40 miles west of downtown Houston.
The distribution center is being developed by an affiliate of Duke Realty REIT on an 86-acre parcel, and preliminary land-clearing work is already underway, Caudill said.
“I drove by there last week and Duke is already churning those rice fields,” said Caudill, a partner in the Industrial Brokerage Services division of NAI Partners.
The property had formerly been part of the J.D. Woods Family Trust and was within the City of Houston’s extraterritorial jurisdiction before it was annexed by the City of Katy.
Caudill recalled his father’s influence on his work ethic. “My dad, Joe Caudill, was in commercial real estate in Houston for 40 years before he passed away 12 years ago. He was a Depression-era kid who learned the value of hard work at a very young age and passed that on to my siblings and me,” Caudill said. “He used to say: ‘If you want anything out of life, you better get your ass out of bed and work from sunup to sundown. You can sleep when you’re dead.’ I’ve always followed his advice, and it rings especially true in the commercial real estate brokerage business.”
What is the status of Houston’s industrial market as we enter the second quarter of 2017?
“Two submarkets remain under pressure: the north submarket and the southwest. Both have an abundance of available space, and rental rates are falling. Landlords in these areas are becoming more aggressive with concessions,” Caudill said. “This trend will likely persist in those submarkets for the foreseeable future, resulting in generally lower rents.”
How are crane-served manufacturing buildings faring? The downturn in oilfield drilling hit that sector hard.
“Outside the Beltway, the northwest crane-served market is struggling. There is still an oversupply of crane-served manufacturing buildings across Greater Houston. My oilfield service clients tell me activity is focused on the Permian Basin right now, with little demand coming from the Eagle Ford. Landlords holding onto these specialized facilities may be in for a long wait if the ‘bathtub recovery’ some economists have predicted comes to pass. I’m seeing crane-served industrial rental rates decline by as much as 30 percent from their 2014 peak.”
Despite those pockets of weakness, many other areas of Houston’s industrial market continue to show strong occupancy and steady demand, driven by logistics, e-commerce expansion and companies seeking distribution and light industrial space close to transportation corridors.