Central Texas continues to see growth of Amazon

Amazon continues to grow its footprint in Central Texas, with its latest lease adding more than 110,000 square feet of warehouse space in Austin.

The lease, signed in May, is for 111,300 square feet of space, according to CoStar Group Inc., a global commercial real estate data company.

The lease comes on the heels of two other recent large leases as the Seattlebased e-commerce company continues to expand its distribution facilities and office space in the AustinRound Rock region.

In Pflugerville, Amazon is building a distribution center that will have 3.8 million square feet of space. That will make it the biggest industrial distribution center to be built in the Central Texas region in two decades, one industrial real estate broker said last month.

Juan Arias, senior consultant with CoStar Advisory Services, the consulting arm of the CoStar Group, said this week that Austin “is a major target for Amazon and is expected to see significant space taken up by Amazon — likely only Dallas will see more in Texas.”

Sam Tenenbaum, director of analytics for CoStar, said Austin is attractive to Amazon as the number of younger residents continues to grow in the region, where half of the population is under 35.

“They’re looking at cities with young populations that will be in the Amazon ecosystem for a very long time,” Tenenbaum said.

Amazon recently signed a lease for all 442,000 square feet of space at an industrial development in Round Rock.

Amazon plans to operate a distribution center in a building there that consists of 180,700 square feet of space, Otto Swingler, a vice president with Stream Realty Partners LP in Austin said last month. Two other buildings there — one with more than 170,000 square feet and the other with over 90,000 square feet — will be used for parking, Swingler said.

Amazon also plans to open a distribution center this year in Buda. That center will be in 305,000 square feet of leased space and is expected to bring hundreds of jobs.

The Buda and Round Rock projects amount to nearly 750,000 square feet of space that Amazon has leased within the past two or three months, Swingler has said.

Amazon’s eventual head count at the Pflugerville distribution center could be “between 1,000 and 2,000” employees, Swingler said last month.

Amazon continues to be a major driver of demand for industrial space — specifically warehouse and distribution space — representing about 30 percent of demand in the U.S. over the last decade, said Arias of CoStar Advisory Services.

Globally, Amazon occupies more than 270 million square feet of industrial space with its distribution and data centers, according to CoStar. Arias said about 180 million square feet of that space is in the U.S.

Amazon plans to add an additional 60 million square feet of industrial space to its distribution network in the next couple of years in the U.S., including in already pre-leased and proposed new space.

About one-third of that new space is expected to be in Texas, California and

Florida, as Amazon is targeting markets that have seen strong population growth as well as consumer buying power growth and are expected to continue to grow, Arias said.

On the office side, Amazon’s global offices occupy 40.7 million square feet of space. Of that, 23 million is in North America, with the vast majority in the U.S.

In Central Texas, Amazon currently occupies — or soon will occupy — more than 2 million square feet of space. About 1.8 million square feet of that space is warehouse and about 365,000 square feet is office space, Tenenbaum and Arias said.

Pflugerville officials have not confirmed that the company building the 3.8million-square-foot project is Amazon and refer to it only by its code name, Project Charm.

But during a Jan. 14 council meeting, Amanda Swor, with the Drenner Group, referenced Amazon.

“One of the questions that was asked is in regards to taxes and incentives, and Amazon — the company — is not seeking any incentives or tax rebates from the city,” Swor said at the January meeting.

Swor was out of the office this week, and did not immediately reply to a text and email for comment Thursday.

At the January meeting, Pflugerville Mayor Victor Gonzales said Project Charm “has initially demonstrated that it would bring a substantial tax value to the community,” which he said will help keep residential property values low.

The Pflugerville distribution center would be more than four times the size of Amazon’s 855,000-squarefoot distribution facility in San Marcos.