The developer behind a new local Walmart distribution center is planning its next big project in one of Houston’s hottest areas for industrial real estate.
Dallas-based Hunt Southwest unveiled plans Thursday for a new 1 million square foot distribution center in the Brookshire area west of Katy and north of Fulshear.
Called I-10 West Trade Center, the project is planned south of Interstate 10 at 31270 Kingsland Boulevard. The site is just north of a large distribution center for Ross Inc. and south of major facilities for Rooms-to-Go. Directly across I-10 are large distribution centers for Igloo, Amazon, Goya and Medline.
“We really like the west side because of the population growth, the job growth and the housing growth in that area and the ability to serve Texas regionally from that location. You can get to Houston, but to San Antonio and Austin as well easily. It’s just a great regional or local distribution location,” said Preston Herold of Hunt Southwest in an interview.
Contractors are expected to start construction on the new project later this month and wrap up by early 2023.
Designed by architecture firm Powers Brown, the new 1.05 million-square-foot cross-dock facility will feature 40-foot clear height, an ESFR sprinkler system, LED lighting with motion sensors and skylights. The site offers ample accessibility for trucks, including dedicated truck lanes, 206 dock-high doors, four overhead doors with drive-in ramps, 190-foot-deep truck courts, and parking for 330 trucks and 354 cars.
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Hunt Southwest purchased the 68-acre site in summer 2021 from the Louis A. Tsakiris Family Partnership, Herold said.
The developer is chasing a single-tenant, full-building lease for the project, but Herold said the project is flexible enough to divide into multiple smaller pieces or to even to house light manufacturing uses.
CBRE’s Jason Dillee and Nathan Wynne are handling leasing for the speculative I-10 West Trade Center, which has not yet secured tenants.
But Herold said he is confident in demand for industrial space in the west Houston I-10 corridor where distribution tenants can easily access the growing population center in Katy.
“We feel like the [best] two submarkets in Houston for large distribution centers are the far west submarket [near Katy/Brookshire] and the southeast port submarket,” Herold said, referring to the market near the Port of Houston in TGS’ Cedar Port Industrial Park.That’s where Walmart recently leased a 1 million square-foot facility Hunt Southwest built.
“Obviously we had a successful development with Cedar Port and basically couldn’t ask for anything better in terms of a tenant that we were able to get with a full-building, long-term lease,” Herold said.
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Herold confirmed that Walmart’s lease started at the beginning of this year and that the retailer is expected to handle its own build out.
Houston Chronicle broke the news about the project at the end of January, but at the time Herold couldn’t confirm the deal which is likely to be one of the largest industrial leases in Houston in recent months.
Elsewhere in the metro in Humble, Hunt Southwest also recently completed construction on a 500,000 square-foot industrial project called 59 Logistics Center which has not yet been leased.
However Herold is still bullish on the Houston industrial market as the city’s population expands and developers ride the post-pandemic wave of demand for distribution and e-commerce space.
“We’re still seeing heavy rent appreciation and last year the net absorption in Houston was triple what would previously be considered a great year,” Herold said, referring to a common indicator of tenant demand that measures the difference between tenant move outs and move ins.
In the past 10 million square feet of net absorption in Houston was considered a “good” year, he said. But last year there was about 39 million square feet of net absorption across Houston’s industrial real estate market, according to research from the real estate firm Transwestern. In the Katy-Far West area around Hunt Southwest’s new project, net absorption was about 584,000 square feet last year.
There was also 2.8 million square feet of new projects under construction in the area, according to research from real estate firm Transwestern.
“We’re seeing unparalleled demand and we’re hoping that could continue,” Herold said.
