Industrial Space in Short Supply – Houston – San Antonio

Industrial properties are well occupied in Houston.  Energy Service (Oil & Gas) companies have quickly filled available space in order to meet demands from growing oil & gas plays like the Eagle Ford Shale.

Companies Are Expanding and Relocating to Houston

Many of my clients have chosen to remain (and even expand) in Houston as a primary hub, and then open up satellites in South Texas to take advantage of the Eagle Ford Shale Play in South Texas.  Given Houston is deemed as one of the energy capitals of the world, has a low cost of living and enjoys a quality labor pool, companies are oftentimes relocating to Houston.  Therefore, industrial space is being absorbed at a nice clip.  New development has started on 3 speculative projects for distribution space.  This hasn’t happened since 2007.  Also, over 2 MM SF of manufacturing space (buildings with cranes) is under development for both users and future occupiers.  Overall, we know of very little speculative projects underway in any other area of the country.  Notable companies expanding in Houston are National Oilwell Varco, Weatherford, and KBR.

Manufacturing and Distribution Space is Hard to Find

“What do you mean there isn’t an ample amount of industrial (distribution/manufacturing) space available?”  I’m often challenged by this question, especially from companies not in Houston.  Based on challenges in the national economy, it seems industrial property would be readily available in Houston.  Well, that is not necessarily the case, particularly for the West side of the city.  It’s a 94-96% occupied market – and even higher in the manufacturing sector. The Eagle Ford Shale in South Texas has driven demand for industrial space given the need for technology enhancements, manufacturing of products (particularly requiring a heavy crane), and assembly & distribution of those finished products –  such products including valves, tubing, cabling, drilling motors/tools, etc.

Companies Also Expanding into South Texas (San Antonio area)

In addition to the growth and expansion in the Bayou City, Weatherford and Halliburton have announced new locations in the San Antonio area.  Halliburton’s presence will create over 1,500 jobs.  Experts say we’re only in the 2nd inning of this “game”.  This is obviously a significant and positive driver to the San Antonio economy as well.

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