HOUSTON – (Realty News Report) – Developers are rapidly expanding warehouse construction in Houston to meet growing demand driven by online shopping and other business activity.
According to a third-quarter report from commercial real estate firm Cushman & Wakefield, approximately 16.9 million square feet — roughly 389 acres under roof — of large distribution space is currently under construction across the region.
“Demand for industrial space has been steady, fueled by an uptick in online shopping. As e-commerce spending continues to grow, companies are seeking space to fulfill demand leading up to the holiday season,” said Allison Bergmann, an industrial broker with Cushman & Wakefield’s Houston office.
Amazon, the e-commerce giant, has added several new distribution centers around Houston as part of a nationwide plan to expand its logistics footprint. Reports indicate Amazon has also explored repurposing vacant mall space, underscoring how traditional brick-and-mortar retail is shifting in response to e-commerce growth. The coronavirus pandemic accelerated the shift by increasing consumers’ reliance on home delivery.
Large retailers have likewise increased their warehouse requirements in the Houston market. For example, Dollar Tree Inc. recently completed a 1.2 million-square-foot distribution facility in Rosenberg on Spur 10 in Fort Bend County, about 40 miles southwest of Houston.
Rising online grocery orders and meal-kit deliveries have driven demand for refrigerated storage as well. Ti Cold Development is developing a 304,000-square-foot cold storage facility in north Houston near George Bush Intercontinental Airport within the East Hardy Commerce Park.
Overall, Cushman & Wakefield reported that 6.3 million square feet of industrial space was delivered during the third quarter of 2020, bringing year-to-date completions to 21.83 million square feet.
Notable tenant move-ins in the third quarter included Katoen Natie occupying 604,800 square feet in the southeast; American Furniture Warehouse moving into 897,700 square feet; and Wholesale Sweeteners taking 349,050 square feet, according to Cushman & Wakefield.
The Houston industrial market posted an overall vacancy rate of 10.6 percent for the period, the firm said.
“After a slow start to 2020, and an unprecedented pause in activity due to the pandemic, the velocity of active deals picked up in June while many of these new requirements are just now crossing the finish line,” said Jim Foreman of Cushman & Wakefield. “We look for absorption to be even better in the fourth quarter, rounding out a better-than-expected year for both leasing volume and absorption.”
Oct. 27, 2020 Realty News Report Copyright 2020
File: E-Commerce Boom: 389 Acres
File: Cushman & Wakefield. Rosenberg. Houston. E-Commerce Boom: 389 acres of warehouse space under construction. Industrial market.