No tenant? No problem. Million-square-foot ‘spec’ industrial buildings are popping up across Houston
September 30, 2022
From Baytown to Brookshire to Conroe and beyond, developers are breaking ground on million-square-foot industrial buildings.
After success with its first building, Houston-based TGS Cedar Port Partners is set to deliver another 1.2 million-square-foot spec distribution building in Baytown early next year, adding to a growing number of mega-buildings going up in the Houston region with no tenant in mind.
TGS Cedar Port DC 4 will be the first warehouse in the 850-acre Tract 7 of TGS Cedar Port Industrial Park, a 15,000-acre rail and barge-served industrial park along the Grand Parkway in Chambers County. The developer is erecting steel on the building, which broke ground at 7505 Fisher Road in the second quarter and is planned for completion in the first quarter of 2023, according to commercial real estate firm Partners, which is marketing the project.
The development follows the completion of the 1.2 million square-foot DC 1 building at 6363 FM 1405 in Baytown, which was also developed on a spec basis but is no longer on the market, according to Partners. The companies declined to identify the building's occupant.
Designed by Powers Brown Architecture with up to 40-foot clear heights and built by E.E. Reed Construction, the building is being marketed for lease by John Simons, Gray Gilbert, and Chris Haro with Partners. TGS Cedar Port Industrial Park has experienced a surge in construction as companies seek locations near major roads such as Interstate 10, Texas 225 and the Grand Parkway and the Port of Houston's Bayport and Barbours Cut container terminals. It is a growing hub for distribution and fulfillment centers and the longtime home to Walmart and Home Depot and newcomers Floor & Décor, Article.com, Webstaurant and Plastic Express.
Overall, the amount of leased space in TGS Cedar Port Industrial Park grew by 4 million square in the last 12 months, according to Partners.
The TGS Cedar Port DC 4 building is among the biggest spec buildings in the Houston region as demand for industrial space continues to rise as people shop more online. In total, developers are building 24.6 million square feet of industrial projects across the Houston region, according to Partners.
The Houston region's industrial vacancy rate dropped to 5.8 percent in August, down from 7.5 percent in August 2021, according to Partners. From January to August, move-ins minus move-outs totaled a record 18.5 million square feet, up 5.6 percent year-over-year.
As trade through the Port of Houston grows and Houston gains traction as a market for regional distribution centers, several major projects have broken ground on a speculative basis all across town. Houston-based Lovett Industrial, in partnership with North American real estate investment firm Cresset Partners, broke ground in mid September on NorthPort Logistics Center, a 1.2 million-square-foot logistics facility on 75 acres in the Conroe Park North business park. Completion is planned in the second quarter of 2023. Lovett, in partnership with New York-based Clarion Partners, is also developing the Interchange 249 business park, anchored by a 900,000-square-foot distribution center for Macy's, in Tomball.
Chicago-based Centris Industrial broke ground on a speculative development consisting of two buildings in Generation Park in northeast Houston on Aug. 15. The project will bring a 1 million-square-foot building to the market in the third quarter of 2023, while a 256,000-square-foot building is slated for completion in the second quarter.
Dallas-based Hunt Southwest announced in March the ground breaking on I-10 West Trade Center, a 1.05 million-square-foot distribution center south of Interstate 10 at 31270 Kingsland Blvd. in the Katy/Brookshire area. Completion is planned in early 2023. The company recently developed a 1 million-square-foot spec building at Cedar Port Trade Center that will be occupied by Walmart.
Dallas-based Stream Realty Partners wrapped up construction on phase two of its Empire West project in Brookshire in August. The company completed six buildings totaling 2.3 million square feet, with the largest containing 1 million square feet.