Area boasts a warehouse building boom
A massive warehouse in Katy, built on spec, shows confidence in the local market
The warehouse being built in Katy doesn’t have a tenant to fill its 12-football-fields size cavern, but that hasn’t stopped developers who are confident in Houston emerging as a major retail distribution center.
T HE latest warehouse going up in Katy will be the size of 12 football fields.
The state-of-the-art building will span nearly 700,000 square feet and boast 36-foot ceilings. It will include a fast-response fire sprinkler system and LED lighting throughout. There will be enough parking for nearly 700 cars and more than 250 trailers.
What this massive cavern lacks, however, is a tenant. But that hasn’t stopped developers from breaking ground on the largest spec industrial project in the Houston area. The project’s scope and speculative nature are signs of developers’ confidence in Houston as an emerging distribution center for brick-andmortar and online retailers.
Oakmont Industrial Group began construction in late September on Oakmont West 10, on 42 acres off Interstate 10, 4 miles west of the Grand Parkway. The 673,785-square-foot warehouse is slated for completion in July.
The Atlanta-based developer is working with Greenville, S.C.-based equity partner Pacolet Milliken Enterprises on the multimillion-dollar development. It’s one of the last projects in the 472acre West Ten Business Park, owned by Houston-based Parkside Capital.
Historically, Dallas has been the regional distribution hub for major Texas cities, including Houston. But the rise of e-commerce promising shoppers nearinstant gratification has forced retailers to place warehouses and distribution centers closer to consumers.
Houston, with its growing population, likewise has become more attractive to industrial developers in general. Distribution centers are flocking to west Houston, in particular, because of its cheap and plentiful land and access to major highways that lead to Austin and San Antonio. Some 16 million people live
within a 200-mile radius of Katy.
“There’s a demand for industrial distribution serving those rooftops,” Oakmont’s Tom Cobb said. “We’re just trying to fill that demand.”
Developers also are building larger and larger warehouses to stock a wider range of products consumers are buying online, said Eric Geisler, president of Houston-based Economic Incentive Services, a real estate consultant that works with many industrial developers.
Twenty years ago, a spec warehouse project averaged somewhere between 50,000 and 100,000 square feet. Today, it’s not unheard of for spec facilities to top 500,000 square feet, Geisler said.
“It used to be 100,000 square feet was the limit of the risk developers were willing to take,” Geisler said. “E-commerce has really changed the game significantly.”
Cobb said he is confident Oakmont will lease up its gigantic spec warehouse, which was designed for one to four tenants. NAI Partners, a Houston-based commercial real estate firm, brokered the land deal for the project and is marketing the lease.
“This is certainly on the larger size for a Houston spec distribution facility,” Holden Rushing of NAI said. “But with the amount of activity and deal flow currently and in the future, the market should be able to support a building of this size. This is right in the sweet spot for what larger retailers, logistics groups and e-commerce users are looking for.”
Geisler, who did not work on the Oakmont project, agreed.
“Even though it’s a large facility, I think there’s enough users out there that (Oakmont) can fill it up pretty quickly and get their return on investment,” Geisler said.
Oakmont received tax incentives from the city of Katy and from Waller County to develop its warehouse. Both municipalities offered the developer a 100 percent tax abatement for two years. In Katy, that tax break excluded school and municipal utility district taxes.
A project of that scale could help Katy and the greater Houston area land new businesses, said Patrick Jankowski, an economist with the Greater Houston Partnership.
“Large properties allows us to go after larger companies,” Jankowski said. “It makes it that much easier to market Houston.”