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Retail Rush : New 1 million SF IKEA Distribution Center May be Tip of the Iceberg for Retailers’ Warehouses

Faron Wiley

Faron Wiley

BAYTOWN, Texas – The new 1 million SF IKEA distribution center planned for the TGS Cedar Port Industrial Park near Baytown is a sign of things to come.

At the CBRE press luncheon last week, Faron Wiley of CBRE’s industrial division says Houston has come of age in for retail distribution space. For years, Dallas has been the major warehouse/distribution hub for the entire region. But Houston growth has elevated Houston in retailer’s logistics plans, Wiley says.

Clay Development & Construction has a significant amount of distribution space development underway in the Cedar Port project, which is being marketed by NAI Partners. In addition to IKEA, Wal-Mart and Home Depot have large distribution buildings in the area.

“Houston has become a market that’s too big to be serviced from 200 miles away (in Dallas),” Wiley says.

Aldi, a grocer that recently entering the Houston market, just completed construction on a 650,000-SF distribution center in Rosenberg on the Houston’s southwest side.

Overall, the Houston industrial real estate market is strong, Wiley says, although sublease supply has edged up a bit in the northwest and north sectors of the city due to softness in manufacturing related to the energy industry.

“Our numbers aren’t bad and I don’t think they are going to get bad,” Wiley says.

The vacancy rate for Houston industrial space stood at 4.9 percent at the end of the first quarter, CBRE reports.

And it’s not just Houstonians that can boast about strong industrial markets, says Robert Kramp, director of research and analysis for CBRE. “Every market in Texas has tight vacancy,” Kramp says.

May 2, 2016

Ralph Bivins is editor of Realty News Report, a Texas-based publication.

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