HOUSTON – (Realty News Report) – Warehouse construction is surging in Houston as strong job growth, improving oil prices and the city’s emergence as a major distribution hub has energized the industrial real estate sector.
Sixty-three major industrial buildings are currently under construction and more new space is on the way, according to a new report by the Avison Young real estate firm.
“Several large projects are scheduled to break ground in the fourth quarter with 10.3 million square feet currently under underway,” Avison Young said. More than 9 million square feet of industrial space has already been completed so far in 2018, which will be one of the best – if not the best – year ever for industrial construction in Houston.
With some exceptions, e-commerce suppliers drive activity in north and northwest Houston while the petrochemical industry creates demand near Port Houston.
“With the energy business currently on a renewed growth track, the industrial market will continue to have a profound impact on the Houston economy,” said Bob Berry, principal at Avison Young. Some 128,700 new jobs have been created in Houston in the last 12 months.
The strength of the industrial market has attracted interest from investors of all sorts.
“The demand and activity in the industrial sector has been exceptionally strong and that has been reflected in the valuation of distribution buildings and other industrial properties in the Houston area,” said Mark Sikes, principal with Deal Sikes, a real estate valuation firm. “The new industrial buildings have been leasing up briskly and the vacancy rate remains fairly low. The solid fundamentals support the upward movement in the recent sales prices that have been reported.”
Port Houston ranks number one in the nation in foreign tonnage and has surged to be ranked fifth in container shipping, according to the Port and JOC Piers data. In the first half of the year, Trans-Pacific imports at Port Houston jumped 24 percent, as improvements at the Port facilitated more imports through the expanded Panama Canal.
Build-to-suit activity is strong with new 500,000-square-foot industrial projects in Cedar Port Industrial Park near the Port for both Vinmar International and Plastic Bagging and Packing.
Construction is also happening because of demand from big box retailers such as Best Buy (550,000 square-feet) and Conn’s HomePlus (656,658 square feet). E-commerce also has created demand for last-mile distribution space that is well located for quick consumer delivery.
Other new industrial and distribution projects include: (Source: Avison Young)
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Clay Development and Construction: Spec 349,400 SF Cedar Port IV in Baytown. Delivery: Summer 2019.
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Clay Development and Construction: Spec 214,300 SF Sheldon Business Park. Delivery: Spring 2019.
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Crow Holdings: Spec. Layne Crossing development with six buildings totaling 530,000 SF in Greens Crossing Business Park in North Houston.
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Hines: Spec: Pintail Industrial Park in West Houston. 1.5 million SF
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Hines: Spec: Grand National Business Park Beltway 8 and Gessner in Northwest Houston. 107 acres.
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Triten Real Estate Partners and Carlyle Group. Spec. 414,160 SF distribution space at 4600 Underwood.
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Triten Real Estate Partners. Two buildings totaling 330,000 SF in Bayport North Logistics Center. Delivery: early 2019.
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Wolff Cos. Waller County Highway 290 and FM 362. Mixed-use 230-acres for industrial and other uses.