We recently analyzed the U.S. office pipeline to see which are the cities expected to add the most office space during 2018. The coming year looks promising in terms of office development activity, so we thought we’d take another look at the commercial pipeline, this time focusing on the industrial sector. We also decided to narrow that focus and zoom in on the Texas industrial market, and here’s why.
According to recent CBRE research, 26% of this year’s transaction activities in Texas were the result of demand in the distribution and logistics industries, while statewide industrial net absorption more than doubled during Q3. Industrial development is on a roll in the state’s major markets, including Houston, which welcomed one of its largest industrial deliveries to date: the 4.1 million Daikin Texas Technology Park. The massive manufacturing and distribution plant cost $417 million to develop, the Houston Business Journal reports, and is expected to create 4,600 direct jobs and yield $3.9 billion in annual economic impact to the region. The Dallas-Fort Worth market is also doing well in terms of industrial construction activity. JLL predicts Dallas will continue to see growth in industrial development and absorption, being an appealing destination with plenty of fulfillment and distribution potential.
Given that, by all accounts, this has been a solid year for industrial activity in The Lone Star State, we figured it’d be interesting to see what the next year will bring to the market. We used Yardi Matrix data to track down all industrial projects equal to or in excess of 50,000 square feet that are currently under construction in Texas, with completion dates set for 2018 (see ‘Methodology’). Check out our findings below.
Lancaster Will Welcome the Most Industrial Space in 2018
The Texas city to add the most industrial space during 2018 is, according to our numbers, Lancaster. Located in the DFW real estate market, within the Best Southwest, the city of Lancaster will welcome 3 new buildings and 2 million square feet of industrial space in 2018. These new developments will increase the city’s existing industrial inventory, which encompasses nearly 8 million square feet, by 26%.
Conveniently situated within the Dallas-Fort Worth Metroplex, the city of Lancaster has seen a lot of growth in its industrial sector in recent years, mainly due to its location. The city provides easy access to the cities of Dallas, Fort Worth, Houston, Austin, Shreveport, San Antonio and Laredo, which are accessible via three major interstate highways and the Lancaster Regional Airport. Some of the top employers in the city are industrial businesses, including BrassCraft Manufacturing, AT&T Distribution Center, NFI Transportation Logistics, Johnstone Supply and BMW of North America, according to the City of Lancaster. BMW opened its Regional Parts Distribution Center in early 2014, at Prologis Park 20/35. The facility was built by Prologis and is used to store and distribute BMW parts to dealerships in Louisiana, Mississippi, Arkansas, Oklahoma and Texas, according to an official release. So it’s no wonder investors are willing to bet on the Lancaster industrial market, especially since the city offers more available land for development compared to cities like Dallas or Houston.
The city of Dallas will be the second-most active city in the state for industrial deliveries in 2018, and is expected to add 3 new buildings totaling 1.9 million square feet of space. However, as the city’s existing industrial inventory already encompasses close to 90 million square feet, next year’s deliveries will only expand the tally by 2%.
By contrast, the city of Euless, located in the DFW market, will expand its existing industrial inventory by a staggering 325% in 2018. The market will add 3 new buildings and 646,796 square feet of new industrial space to its modest existing inventory of 198,976 square feet during the upcoming year. All three buildings are part of Cabot Properties’ International Logistics Center located at SWC South 20th Ave. & South Airfield Drive. Cabot Properties joined forces with Stream Realty Partners to break ground on the spec warehouse and distribution facility in September. Completion of the three-building project, which lies within Foreign Trade Zone #39 and thus benefits from a Triple Freeport Tax Exemption, is scheduled for completion in the second half of 2018.
Check out more details on each city’s industrial activity below:
Crow Holdings Spearheading the Largest Texas Industrial Development of 2018
Texas’ biggest industrial delivery of 2018 will come online at 2801 North Houston School Road in Lancaster, where Crow Holdings is developing a 1.2 million-square-foot warehouse and distribution center dubbed I-35 Logistics Crossing. The spec project will consist of two twin buildings each featuring 610,806 square feet of space, and is scheduled for completion in the spring.
The second-largest expected delivery of 2018 is General Motors’ Assembly Plant expansion in Arlington. Located at 2525 E. Abraham St., the 1.2 million-square-foot project is the only manufacturing facility on our list and one of only three non-spec developments. According to the Dallas Business Journal, the $1.4 billion expansion will increase the Assembly Plant’s size to a total of 4.7 million square feet, upon completion in late 2018.
Another notable development coming to fruition in 2018 is the 575,000-square-foot Prosper Business Park in the DFW Plano submarket. The 23-building flex project, located at SEC Cook Lane & Prosper Trail in the city of Prosper, Texas, is led by Legacy Commercial Realty and scheduled for delivery in December 2018.
Check out the top 10 largest industrial projects currently underway below:
Methodology
We used Yardi Matrix data to analyze all industrial projects equal to or in excess of 50,000 square feet currently under construction in the state of Texas, with completion dates scheduled for 2018. Our analysis was based on data recorded up until November 15th, 2017. Industrial campuses that consist of more than one building are listed as a single item.
