2Q 2020 Houston Industrial Market Brief

Page 9

SUBMARKET INTELLIGENCE FAR WEST & KATY

BROOKSHIRE

VITAL STATS

KATY

14.0%

14,862,767 SF

HLC OUTLOOK The Far West submarket follows along Interstate 10, stretches from Highway 6 out to Brookshire, and up and down the newly developed Grand Parkway. The submarket benefits from rapid population growth in West Houston, Katy and the surrounding communities. Additionally, the submarket’s location along Interstate 10, and proximity to San Antonio and Austin, make it an attractive location for new regional e-commerce distribution centers. Prominent tenants and users in this submarket include Medline, Goya Foods, Rooms-to-Go, Amazon, Costco, Academy Sports + Outdoors, and Igloo. Vacancy increased significantly to 11.1% in 2Q 2020 from 9.9% in 1Q 2020. The main reason is due to the 1,287,550 SF of new construction deliveries that occured YTD through 2Q 2020. The submarket has experienced positive absorption but only 108,578 SF YTD. However, we will need even stronger absorption in the coming quarters to prevent vacancy from increasing further. The 5,572,257 SF under construction at the end of 2Q 2020 in the Far West submarket is the most in the metro. It is important to note that several large build-tosuits such as Ross Dress For Less (2.1M SF) and Medline (1.3M SF) account for a large portion of the under construction projects. It will be important to watch whether the larger tenants and users in this submarket decide on a build-to-suit to accommodate future growth versus leasing additional space in speculative building projects.

NEW DEVELOPMENTS • • • • • •

Ross Dress For Less – a 2.1M SF build-to-suit development Medline – a 1.3M SF build-to-suit development Empire West Business Park (Phase 1) – a 1,036,057 SF project with Stream Realty Amazon | Duke Clay 99 – a 806K SF build-to-suit development The Uplands Twinwood DC 1 – a 737,630 SF project with Clay Development Jordan Ranch Distribution Center – a 494,550 SF project with Phelan-Bennett & WPT Reit • Clay 99 – a 433,200 SF project with Duke Realty • Cane Island Business Center – a 277,400 SF project with Insite Realty & Principal

LARGE EXISTING VACANCIES • • • •

Clay 99 Building Five – 433,200 SF Pederson Distribution Center – 205K SF First Grand Parkway | Grand Parkway Commerce Center | Building 1 – 173,045 SF First Grand Parkway | Grand Parkway Commerce Center | Building 2 – 141,833 SF

1,500,000 12.0%

1,300,000

10.0%

1,100,000

8.0%

900,000 700,000

6.0%

500,000 4.0% 300,000 2.0%

100,000

0.0%

(100,000) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Absorption

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

vs. Prev. Qtr

1Q 20

2Q 20

Vacancy

vs. 12 Mths Ago

9,000

99,578

22,294

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

11.1%

9.9%

6.1%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

149,881

116,226

155,379

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

5,572,257

4,536,200

1,353,669

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

205,200

1,082,550

Source: CoStar

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