Could Houston be running short of available land in some real estate sectors? It may sound unlikely for an ever-expanding Space City, but in certain hot markets—most notably along the Houston Ship Channel—land is becoming harder to find. To get a clearer picture, Realty News Report spoke with one of Houston’s veteran industrial brokers, John Nicholson, Executive Vice President of Development at AVERA Companies. John joined AVERA in November and brings more than 16 years of experience, having negotiated over 700 transactions with an aggregate value exceeding $750 million. Before AVERA, he led Cushman & Wakefield’s Industrial Services group in Houston and previously served as Senior Vice President at Transwestern.
Realty News Report: In a recent speech, you mentioned that land around the Houston Ship Channel is running out. Can you explain?
John D. Nicholson: I describe it as “south of the channel land constraints.” It’s increasingly difficult to find available parcels in Deer Park, Pasadena, and La Porte for industrial development. Many of the larger tracts visible on maps are controlled by major chemical companies, and those owners are generally not selling. They prefer to hold land for future development, which pushes new activity farther east to places like Baytown and other nearby areas.
Realty News Report: How do you view the overall industrial market in Houston?
John D. Nicholson: I expect 2017 to look a lot like 2016, with continued development on Houston’s east side. Leasing should remain healthy, and as confidence returns, we may start to see more oil and gas companies reenter the market.
Realty News Report: Why is it important for an industrial user to have access to tracks from more than one railroad company? Is that about competition?
John D. Nicholson: It’s not always necessary, but having access to multiple railroads gives a user leverage when choosing which carrier to use. That flexibility helps avoid being dependent on a single railroad and prevents a user from feeling captive to one provider’s rates or service limitations.
Realty News Report: Does AVERA have any major new projects on the east side?
John D. Nicholson: We recently purchased a site on the Houston Ship Channel. We’ve secured a tenant for barge operations and expect to make about 25 acres available with deep-water access.
Realty News Report: How is the rise of e-commerce, led by companies like Amazon, affecting the warehouse business?
John D. Nicholson: E-commerce is driving a steady year-over-year increase in demand for warehouse space. Over time, more warehouse square footage will replace traditional brick-and-mortar retail space. Retailers are chasing the Amazon model—and those that aren’t should be—because distribution and fulfillment real estate are increasingly critical to retail competitiveness.
Realty News Report: Can you update us on the 11,000-acre Cedar Port project in Baytown?
John D. Nicholson: New ownership has been actively marketing and developing parcels for both rail and non-rail users. Cedar Port offers strong capabilities for rail service, rail storage, large land parcels, and incentive packages. TGS has been effective in attracting tenants to the park, making it a compelling option for industrial users.
Realty News Report: What is your outlook for Houston’s industrial sector in 2017?
John D. Nicholson: My outlook is positive. I’m optimistic about what 2017 will bring for industrial development in the region.
Realty News Report: You recently joined AVERA. Why did you make the move, and what should people know about the firm?
John D. Nicholson: I’ve worked closely with AVERA for many years on large transactions and felt comfortable with their team and approach. I enjoy structuring deals, and AVERA gave me the chance to continue doing that in a new role. I loved my time as a broker and the colleagues I worked with, but this new opportunity with AVERA is exciting and aligns with my experience and interests.
Jan. 21, 2017 Realty News Report Copyright 2017