HOUSTON – (By Michelle Leigh Smith) – Land is being cleared for one of the Houston area’s biggest warehouses and job-growth projects so far in 2017 – the 1 million SF Amazon distribution center in Katy, says Chris Caudill of NAI Partners.
For Amazon, it’s a place where 1,000 new employees will handle products and packages for distribution.
For Caudill, the Amazon site (on the north side of Interstate 10 near Woods Road) is more memorable. It’s where Caudill grew up hunting ducks and geese in the rice fields, which are about 40 miles west of downtown Houston.
The Amazon facility is being developed by an affiliate of the Duke Realty REIT on 86 acres, where preliminary land clearing work has begun, Caudill said.
“I drove by there last week and Duke is already churning those rice fields,” said Caudill, a partner with the Industrial Brokerage Services division of NAI Partners.
The land was once part of the J.D. Woods Family Trust and in the City of Houston’s extraterritorial jurisdiction but it was annexed by the City of Katy.
“My dad, Joe Caudill, was in the commercial real estate business in Houston for 40 years before he passed away 12 years ago. He was a depression era kid, so he learned at a very young age the value of a hard work ethic and passed this along to my siblings and me,” Caudill says. “He always used to say: ‘If you want anything out of life, you better get your ass out of bed and have yourself working from sun up to sun down. You can sleep when you’re dead.’ I have always followed his advice and it is especially true in the commercial real estate brokerage business.”
What’s the status of Houston’s industrial market as we enter the second quarter of 2017?
“There are two markets that are still shaky – the north submarket and the southwest both have an incredible amount of space. Rental rates are dropping. Landlords are getting aggressive in these submarkets with their concessions,” Caudill said. “This will continue in these two areas for the foreseeable future with overall lower rents.”
What about crane-served manufacturing buildings? The decline in oilfield drilling slammed that sector of Houston’s industrial real estate market.
“Outside the Beltway, the Northwest crane-served market is suffering. There is still an oversupply of crane-served manufacturing buildings in the Greater Houston area. My oil service clients are telling me that it’s all about the Permian Basin and that’s where their work is coming from right now, not much is coming from the Eagle Ford. Landlords that are holding on these facilities are in for a long haul if the “bathtub recovery” that one economist predicted holds true. I am seeing (crane-served industrial) rental rates decreasing as much as 30 percent from the peak in 2014.”
Many other parts of the Houston industrial real estate market showing strong occupancy and demand.