Industrial demand points to one major trend: population growth

Transcription

MARKETVIEW
Texas Industrial, Q2 2016
Industrial demand points to one
major trend: population growth
Vacancy Rate
6.0%
Net Absorption
8.5 MSF
Under Construction
Completions
33.6 MSF
9.1 MSF
Texas industrial aggregates the Austin, Dallas/Ft. Worth, El Paso, Houston, and McAllen markets.
Arrows indicate change from previous quarter.
• AUSTIN
The industrial market finished Q2 2016 with
citywide vacancy reaching 6.7%. These are
levels not seen since the late 1990’s, with three
submarkets having vacancy under 3.0% and
citywide warehouse vacancy at 5.1%.
Figure 1: YTD 2016 Texas Industrial Activity by Top 10 Industries
Food & Beverage MFG & Processing
Transactions (SF)
Transportation/Distribution/Logistics
Transportation/Distribution/Logistics-3PL
3,516,314
Machinery, Automation & Appliances MFG
• DALLAS/FT. WORTH
Occupiers in in the Metroplex took down 6.6
million sq. ft. during the last quarter. Total
vacancy continued steady compression, down
30 basis points to 6.4%.
2,706,747
2,600,595
Other-Services
Building Materials & Construction MFG
Wholesale
E-Commerce-Related Direct to Consumer
• EL PASO
After a two year of positive streak, two large
vacancies pushed the local market into negative
net absorption. Despite this, market net
absorption remained positive year-to-date with
vacancy below 9.0%.
• HOUSTON
Vacancy is stable, and received a 10 basis point
(bps) increase over the previous quarter from
4.9% to 5.0%, due mostly to new product
deliveries. Rates remained near historically low
levels with strong net absorption of 1.8 million
sq. ft., compared to Q1 2016.
• MCALLEN
Q2 2016 net absorption continued the eleventh
quarter positive streak in net demand and offset
the largest wave of vacancies since Q4 2014.
This robust activity pushed vacancy down further
to a new cycle-low reaching 6.5%.
Q2 2016 CBRE Research
Warehousing/Storage
Motor Vehicles & Parts MFG
Source: CBRE Research , Q2 2016.
Other
Logistics, Consumer-Related Demand Top
Key Regional Industrial Transactions
Aggregate leasing data from top transactions across all
Texas markets indicate diverse demand. Consumer goods
manufacturing, light manufacturing, and transportation
and logistics continue to be robust demand drivers for the
state, supported by increasing retail supply chain
operations and expanding demographics. Much like in Q1
2016, these industries together comprised over 30.0% of
space-use demand. Active logistic and consumer good
manufacturing sectors continue to support the development
of Texas as a major worldwide logistic hub and hotbed for
further trade driven expansion.
© 2016 CBRE, Inc. |
1
M A R K E T V I E W TEXAS INDUSTRIAL
T E X A S PAY R O L L G R O W T H L AG S U. S. ; U N E M P LOY M E N T S T I L L B E LO W U. S.
Total nonfarm employment across the state saw an annual growth of 1.4%, or 171,100 jobs, in June 2016. The
reported jobs growth, up 6 basis points (bps) month-over-month, was less impressive than Q1 2016, and Texas
employment growth remains below the national average which added jobs at an estimated 1.7% . Despite the
resiliency of certain employment sectors, such as the service sector, Texas employment is still being dragged by
manufacturing which is beleaguered by energy prices and a strong dollar putting a crimp into exports. During
June, Texas saw negative growth again in manufacturing with a 3.8% year-over-year contraction. On the upside,
most Texas markets continue to see job creation at a higher rate than the national average. Dallas-Fort Worth
and Austin are the stand out markets at 3.2% and 4.0% year-over-year job growth respectively. In fact, these
markets saw the most impressive job growth of any of the industrial employment sector. Wholesale trade was up
double digits again in Austin and DFW which both saw growth rates at 10.2% for the sector.
CBRE Research continues to closely track the Houston MSA labor market given its economic exposure to energy
prices. Data show that during the trailing 12-month period Houston grew by 0.1% or 3,700 jobs. Although yearover-year growth continued to decelerate, it remained in the black and appears to be leveling off. Houston has
managed to relocate some of the displaced workers or create new jobs in other service industries.
Figure 2: Industrial Employment Breakdown, June 2016 (000’s)
AustinRound Rock
Industry
Dallas-Fort WorthArlington
HoustonMcAllenThe WoodlandsEdinburg-Mission
Sugar Land
El Paso
Texas
Manufacturing
55.3
262.5
16.7
232.0
6.6
846.4
Y-o-Y Growth (%)
(4.1)
(0.2)
(2.1)
(6.2)
(1.1)
(3.8)
Transportation and Warehousing
16.5
170.0
15.0
136.1
8.9
496.5
Y-o-Y Growth (%)
1.8
2.1
2.2
(2.0)
5.1
(0.2)
Wholesale Trade
52.7
220.2
11.2
169.6
8.4
607.6
Y-o-Y Growth (%)
10.2
10.2
1.1
(1.8)
1.6
2.2
124.5
652.7
42.9
537.7
23.9
1,950.5
2.3
3.7
0.2
(3.8)
2.1
(1.1)
Total Industrial
Y-o-Y Growth (%)
Source: Bureau of Labor Statistics, Moody’s Analytics Seasonally Adjusted, CBRE Research, August 2016.
Figure 3: Metropolitan Industrial Employment
Primary Market Employment (000’s)
Non-Primary Market Employment (000’s)
700
140
600
120
500
100
400
80
300
60
200
40
100
20
0
DallasFort WorthArlington
Manufacturing
HoustonThe WoodlandsSugar Land
0
AustinRound Rock
El Paso
McAllenEdinburgMission
Wholesale trade
Source: Bureau of Labor Statistics, Moody’s Analytics Seasonally Adjusted, CBRE Research, August 2016.
© 2016 CBRE, Inc. |
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R O B U S T N E T A B S O R P T I O N E XC E E D S S A M E
PERIOD LAST YEAR
AUSTIN: Overall demand seems to be healthy, it
has been two years since Austin registered a
quarter with a negative figure and is on pace to
have its sixth consecutive year of positive
industrial absorption. This should continue
into the future too. CBRE has identified 1.1
million sq. ft. of requirements currently looking
for space in the market.
DALLAS/FT. WORTH: Q2 2016 marks the 23rd
consecutive quarter of positive net absorption
for the DFW industrial market as it posted 6.6
million sq. ft. in total absorption, and the
strongest absorption for a second quarter of the
year since the most recent economic recovery.
EL PASO: After a record two-year-streak in
positive territory that saw an aggregate net
absorption of 3.1 million sq. ft., two
Figure 4: Net Absorption
Primary Market Absorption (MSF)
18
16
14
12
10
8
6
4
2
0
DFW
Houston
Non-Primary Market Absorption (000’s SF)
1,600
1,400
1,200
1,000
800
600
400
200
0
El Paso
Austin
2014
2015
McAllen
YTD Q2 2016
Source: CBRE Research, Q2 2016.
significantly large vacancies pushed net
Figure 5: Vacancy Rates
absorption into the “red” during Q2 2016.
Vacancy (%)
22
20
18
16
14
12
10
8
6
4
2007 2008 2009 2010 2011 2012 2013 2014 2015
HOUSTON: Vacancy remains near historically
low levels with strong net absorption of 1.8
million sq. ft., comparable to last quarter. All
submarkets, with the exception of the CBD,
posted positive absorption for the quarter. Net
absorption was led by the Southwest submarket
with the Northwest and Southeast submarkets
seeing similarly strong absorption.
Austin
Houston
MCALLEN: Q2 2016 produced a healthy net
absorption after a record setting Q1 2016. Total
Figure 6: Availability Rates
transactions pushed Q2 2016 net absorption
just above 100,000 sq. ft., and were enough to
offset the largest wave of new vacancies since
Q4 2014. Only halfway through 2016, the
market was already above all annual levels in
net absorption during the current cycle.
DFW
McAllen
El Paso
Q2
2016
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2
2016
Austin
DFW
El Paso
Houston
McAllen
© 2016 CBRE, Inc. |
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Figure 7: Overall Industrial Asking Rate, NNN. Annual
$/SF
10.00
8.00
6.00
4.00
2.00
0.00
2007
2008
2009
Austin
2010
2011
Houston
2012
DFW
2013
McAllen
2014
2015
Q2 2016
El Paso
El Paso and McAllen figures exclude Flex Space. McAllen includes Cold Storage when available. Source: CBRE Research, Q2 2016.
R E N T S C O N T I N U E U P, L A R G E LY I N AU S T I N
AUSTIN:
Citywide rents witnessed a $0.04 quarter-overquarter bump for Q2 2016. The gains were
broadly distributed around the market, with
diversity in product type and location. With
vacancy as low as it is, and demand for space
remaining strong, the recent upward trend in
asking rates should continue.
DALLAS/FT. WORTH:
This quarter overall average asking lease rates
increased for industrial spaces by two pennies
per sq. ft., reflecting market sentiment that rent
growth is slowing following marked gains over
the past year. Vacancy in the market continued to
compress, and DFW remains well below
historical highs. With strong demand for space,
lease rates are anticipated to continue their
upward rise.
EL PASO:
The average asking industrial lease rate increased
by $0.09 to $4.16 per sq. ft. in the Q2 2016. This
pushed average rents up by $0.29 per sq. ft., or
7.5%, compared a year ago. Compared to Q1
2016, Class A asking rates started 2016 with a
quarterly increase of $0.05 per sq. ft. or 1.1%,
while Class B saw an increase of $0.09 or 2.3%.
Class B average also surged passed the $4.00
mark for the first time.
HOUSTON:
Lease rate trends indicate a market with steady
overall demand and pockets of mixed activity.
The CBD, Northwest, and South submarkets saw
gross asking rates for warehouse/distribution
and flex space hold steady. The North and
Southwest submarkets each received a $0.02
downward adjustment in asking rates for
warehouse space, to $0.61 and $0.63 per sq. ft.
per month, respectively. This trend can be
attributed to weaker demand in the North, but
balanced by a healthy air and ocean import and
export sector. Southwest submarket demand
continues to respond to the ongoing global oil
price correction.
MCALLEN:
Excluding cold storage, the market wide
warehouse average asking lease rate increased
by a 4.2% this quarter and 1.5% year-over-year to
$3.99 per sq. ft. While rents remain above
recessionary levels, rents again moved up after
leveling off at the end of 2015. Cold storage
industrial rates are tracked separately from the
rest of the industrial set because of wide
differences between the two. CBRE Research did
not produce a cold storage asking rate during Q2
2016 because of depleted available leasing
options after a busy quarter. An average will be
calculated in future quarters with available
options or new development.
© 2016 CBRE, Inc. |
4
C O N S T R U C T I O N S TA R T S U P D E S P I T E S T R O N G
D E L I V E R I E S. D F W A N C H O R S VO L U M E
AUSTIN:
After recent quarters void of any new construction
starts, four new projects began construction in Q2
2016 totaling 622,671 sq. ft. This is more than
double the volume of product under construction
last quarter. All of these new projects were in the
Southeast, as is the majority of product currently
underway.
DALLAS/FT. WORTH:
Deliveries for the quarter totaled 6.2 million sq. ft.
Pre-leasing activity remained very strong with 3.4
sq. ft., or 55.0%, of the 6.2 million sq. ft. of second
quarter deliveries pre-leased. An estimated 20.7
million sq. ft. is currently under construction in
DFW, down from Q1 2016 which was easily the
highest level of activity ever seen in the market.
Yet market demand continued to meet supply – of
the space under construction, 32.0% is pre-leased.
EL PASO:
The supply of industrial buildings in El Paso
remained unchanged as there were no new
construction deliveries. Q2 2016 registered the
start of a 215,000 sq. ft. built-to-suit project in
Santa Teresa, part of the West submarket. The $20
million distribution center for FedEx is expected to
be up and running early 2017. The state of New
Mexico has also confirmed additional projects in
the pipeline for Santa Teresa, including a new $14
million cold storage facility and a possible
expansion to the recently delivered project for
MCS.
HOUSTON:
Construction starts this quarter totaled 954,000 sq.
ft., representing 17 projects. The new development
was fairly even spread across the submarkets, with
the exception of the CBD and Northeast
submarkets which saw no new ground broken.
Over 11.2 million sq. ft., representing 66 projects,
were under construction this quarter. The building
count delivered this quarter totaled 25,
representing 2.9 million sq. ft. of space. Of this
new construction, over 1.8 million sq. ft. was
delivered preleased—a 40% increase in delivered
prelease space over the previous quarter.
MCALLEN:
The supply of industrial buildings in McAllen
increased in Q2 2016 through the delivery of one
construction project. The new industrial building
is located in Mercedes and added 24,000 to our
database, including 6,000 sq. ft. preleased to a
high-tech robotics manufacturer. New space under
construction increased 35.2% compared to last
quarter resulting from one fresh project start in the
last 90 days. The new project is a 100,000 sq. ft.
regional distribution warehouse for an automotive
tire wholesaler. By the close of Q2 2016, four active
projects totaled 388,000 sq. ft. of industrial space
under construction of which 100% is expected to
be delivered occupied.
© 2016 CBRE, Inc. |
5
Figure 8: Top Lease Transactions Q2 2016
.
Transaction Size
(SF)
Market
Tenant
Address
Submarket
AUSTIN
200,000
Centene
5900 Ben White Blvd.
Southeast
DALLAS/FT. FORTH
417,600
Mother Parkers Tea & Coffee
1101 Everman Pkwy.
South Fort Worth
EL PASO
153,000
Mahle Behr USA Inc.
41 Butterfield Trail
Northeast
HOUSTON
159,913
Lowes
1256 Greens Pky.
North
MCALLEN
70,131
Confidential
6100 International Pkwy.
McAllen
Figure 9: Top Sale Transactions Q2 2016
Transaction Size
(SF)
Market
Buyer
Address
Submarket
AUSTIN
257,600 Virtua Partners, LLC
7301 Metro Center Dr
Southeast
DALLAS/FT. FORTH
615,000 Sealy & Company
6601 Oak Grove Rd.
South Fort Worth
EL PASO
419,821 One Liberty Property Trust
1440 Don Haskins Dr.
East
HOUSTON
663,821 First Industrial Realty Trust
8800 Citypark Loop
Northeast
MCALLEN
154,500 Dromoland Properties, LLC
9800 International Blvd.
Pharr
T E X A S S A L E S AC T I V I T Y B O U N C E B AC K I N Q 2 A F T E R
Figure 10: Capital Markets and Industrial Sales
C O O L I N G I N Q 1 : D F W A N C H O R S VO L U M E
Sales Volume (Millions SF)
Year-over-year industrial sales volume for the state
decreased by over 49.0% in Q2 2016. Statewide sales
did increase slightly over Q1 2016, supported by strong
demand in the Dallas market, which saw a 54.0%
increase in sales volume over Q1 2016. The Houston
market saw decreased transaction volume despite a
high amount of quality product on the market. Buyers
and financing remain reluctant to close deals in the
Houston market, as the perception of low oil prices
has weighed heavily on the city--over the last quarter,
Houston sales volume is down 20.0%, but is expected
to improve in the latter half of the year.
12
10
8
6
4
2
0
Apr 2016
May 2016
Primary Markets
Non-Primary Markets
Source: Real Capital Analytics , CBRE Research, Q2 2016.
Jun 2016
Notes: Data exclude transfers, entity-level exchanges,
and partial interest sales. Non-Primary data might
occasionally account for locations outside of CBRE
market boundaries.
© 2016 CBRE, Inc. |
6
CONTACTS
Robert C. Kramp
Director of Research & Analysis,
Texas-Oklahoma Division
[email protected]
E. Michelle Miller
Research Operations Manager,
Texas-Oklahoma Division
[email protected]
Pedro Niño, Jr.
Sr. Research Analyst, El Paso, McAllen
[email protected]
Bradley Smith
Research Analyst, Houston
[email protected]
Miller Hamrick
Research Coordinator, DFW
[email protected]
CBRE OFFICES
Austin
100 Congress, Suite 500
Austin, TX 78701
Houston
2800 Post Oak, Suite 2300
Houston, TX 77056
Dallas
2100 McKinney, Suite 700
Dallas, TX 75201
McAllen
200 S. 10th St., Suite 1209
McAllen, TX 78501
El Paso
211 N. Kansas, Suite 2100
El Paso, TX 79901
San Antonio
200 Concord Plaza, Suite 800
San Antonio, TX 78216
To learn more about CBRE Research,
or to access additional research
reports, please visit the Global
Research Gateway at
www.cbre.com/researchgateway.
Texas totals, including vacancy, represent aggregate data from Austin, Dallas/Fort Worth, El Paso, Houston,
and McAllen markets. El Paso and McAllen data exclude Flex space. Note San Antonio industrial data is
currently undergoing an audit and we expect to be once again reporting on this market by Q1 2017.
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy,
we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness.
This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior
written permission of CBRE.
MARKETVIEW
State’s industrial activity
fueled by consumer demand
Vacancy Rate
6.1%
Net Absorption
Under Construction
9.8 MSF
33.6 MSF
Completions
8.4 MSF
Texas industrial aggregates the Austin, Dallas/Ft. Worth, El Paso, Houston, McAllen and San Antonio markets.
• AUSTIN
Vacancy continued to drop lower, hitting levels unseen
since the late-90s. Q1 2016 finished at 7.1% for
total vacancy, and at 5.7% for warehouse sector.
Figure 1: Q1 2016 Texas Industrial Activity by Industry
Other-Services
Other
Life Sciences-Medical Device MFG
Wholesale
Unknown
Metals MFG
Materials MFG
High-Technology MFG
Paper, Pulp, Packaging & Printing
Confidential
High-Technology MFG-Electronics
The Metroplex saw industrial occupiers take down 5.9
million sq. ft. during the first quarter of the year
making it the second-highest level of absorption
during a first quarter reporting period here since July
2009.
• EL PASO
The new year stared stronger in El Paso than any other
within the current cycle. Overall industrial vacancy
continued to compress and is now down to 8.4%.
• HOUSTON
Despite the continued volatility in the commodity
markets, Houston’s leasing and rental fundamentals
remain even with vacancy steady at 4.9%.
• MCALLEN
Strong net absorption in Q1 2016 continued the tenth
quarter positive streak in net demand. This robust
activity pushed vacancy down further to a new cyclelow reaching 6.6%.
• SAN ANTONIO
The Alamo City continues to impress industrial market
observers as vacancy remained below 7.0% while
absorption posted the 5th consecutive quarter of gains
greater 200,000 sq. ft. in positive net absorption.
Expanding Consumer Needs Drive Q1
Ind ustria l Activity
A collective total of CBRE’s Top 25 transactions for all
markets shows that activity across the state continued
largely diverse. Here, expanding demographics
continued spurring retail supply chain operations
headed by food & beverage and e-commerce. In fact,
these two industries captured 30.0% of all activity
across the state in Q1 2016. The Texas logistic hub
also continued to attract transportation, distribution,
and logistic operations ultimately accounting for 21.0%
of all activity. Other-services and durable goods such
as appliances and electronics also saw a considerable
presence in the opening quarter of 2016.
© 2016 CBRE, Inc. |
1
S TAT E WI D E E M P LOY ME N T D E C L I NE L E V E L E D O F F. J O B G R O W TH R E M A I N S J U S T B E L OW N AT I ON A L
Total nonfarm employment across the state saw an annual growth of 1.6%, or 185,000 jobs, in March 2016. The
reported jobs growth, up 10 basis points (bps) month-over-month, also stopped the 12 month downward growth
trajectory which caused growth rates in Texas to fall below national growth six months ago. The recent softening
in labor conditions was caused by several factors, most notably a lower crude oil price and the goods producing
industry continue to be a drag to the employment market. During March, Texas saw negative growth in
manufacturing and mining and logging employment while many service industries grew, some by as much as
6% in the past year. In terms of industrial employment, wholesale trade reported significant growth across most
markets. Here, Dallas-Fort Worth-Arlington reported a double digit growth of 10.3% with Austin-Round Rock
not far behind at 9.6%. Transportation, warehousing, and utilities remained flat at the state level, however, saw
significant growth across most industrial markets.
CBRE Research continues to closely track the Houston MSA labor market given its economic exposure to the
recent oil price shock. Data show that during the trailing 12-month period Houston grew by 0.3% or 10,400 jobs.
Although year-over-year growth continued to decelerate, it remained in the black and appears to be leveling off.
Houston has managed to relocate some of the displaced workers or create new jobs in other service industries.
Figure 2: Industrial Employment Breakdown, March 2016 (000’s)
AustinRound Rock
Industry
Dallas-Fort
Worth-Arlington
El Paso
HoustonMcAllenSan AntonioThe WoodlandsEdinburg-Mission New Braunfels
Sugar Land
Texas
Manufacturing
57.0
261.6
17.0
235.8
6.6
46.8
854.2
Y-o-Y Growth (%)
-1.1
-0.8
-0.9
-7.7
-0.3
-0.5
-4.2
Transportation, Warehousing, Utilities
16.3
171.3
14.9
137.2
8.9
26.5
496.4
Y-o-Y Growth (%)
2.7
4.4
1.6
-1.3
3.2
3.5
0.0
Wholesale Trade
51.8
216.7
11.4
172.3
8.3
36.1
608.4
Y-o-Y Growth (%)
9.6
10.3
3.0
-1.0
2.1
4.6
2.5
125.2
649.5
43.3
545.2
23.8
109.4
1959.0
3.6
4.1
1.0
-4.1
1.8
2.1
-1.1
Total Industrial
Y-o-Y Growth (%)
Source: Bureau of Labor Statistics, Moody’s Analytics Seasonally Adjusted, CBRE Research, April 2016.
700
140
600
120
500
100
400
80
300
60
200
40
100
20
0
Manufacturing
0
AustinRound Rock
San AntonioNew Braunfels
El Paso
Wholesale trade
Source: Bureau of Labor Statistics, Moody’s Analytics Seasonally Adjusted, CBRE Research, April 2016.
© 2016 CBRE, Inc. |
2
A B S O RPTI ON S T R ON G A S S TAT E WI DE
S I N G L E D I G I T VAC A N C Y E N D U RES
AUSTIN: Q1 2016 absorption totaled 281,109
sq. ft. Unsurprisingly, the bulk of this
absorption was attributed to flex and R&D
space. In fact, flex and R&D absorption was
nearly five times that of warehouse space.
DALLAS/FT. WORTH: The recent quarter
marks the 22nd consecutive quarter of positive
net absorption for the DFW industrial market as
it posted 5.9 million sq. ft. in total market
absorption. DFW remains a logistic
destination, and 76% of Q1 absorption was
attributed to 3PL and e-commerce users.
EL PASO: Marking the eighth consecutive
quarter of positive net absorption, Q1 2016 saw
the strongest first quarter absorption of this
cycle. 606,207 sq. ft. was absorbed in the first 90
days of 2016, setting El Paso up for what could
be another record year of absorption.
HOUSTON: Houston’s overall vacancy held
steady at 4.9% as leasing velocity slowed in
select submarkets. The Northwest’s vacancy
rate decreased from 5.4% to 5.0%, while the
Southeast saw an uptick in vacancy, increasing
from 3.4% to 4.2%. Regardless, overall vacancy
remains healthy and below the historical
average of 6.9%.
MCALLEN: The regional industrial market
registered a strong opening quarter well above
both the previous quarterly and annual highs
set 5 years ago. The 698,844 sq. ft. of positive
net absorption in Q1 2016 continued the tenth
quarter positive streak in net demand. This
robust activity pushed vacancy down further to
a new cycle-low reaching 6.6%.
SAN ANTONIO: The industrial market started
the year with over 290,874 sq. ft. of positive net
absorption, marking the 20th straight quarter of
positive absorption. Vacancy continued down
10 bps to 6.8%, over the first quarter of the
year.
18
16
14
12
10
8
6
4
2
0
DFW
Houston
1,600
1,400
1,200
1,000
800
600
400
200
0
El Paso
San Antonio
2014
2015
Austin
McAllen
Q1 2016
Vacancy (%)
22
20
18
16
14
12
10
8
6
4
2007 2008 2009 2010 2011 2012 2013 2014 2015
Austin
Houston
DFW
McAllen
Q1
2016
El Paso
San Antonio
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1
2016
Austin
DFW
El Paso
Houston
McAllen
San Antonio
© 2016 CBRE, Inc. |
3
$/SF
10.00
8.00
6.00
4.00
2.00
0.00
2007
2008
2009
Austin
2010
2011
San Antonio
2012
Houston
2013
DFW
2014
McAllen
2015
Q1 2016
El Paso
El Paso and McAllen figures exclude Flex Space. McAllen includes Cold Storage. Source: CBRE Research, Q1 2016.
R E N TS C O N TI N U E TO P O P I N AU S T I N
AUSTIN:
Q1 2016 citywide asking rents continue to trend
upwards, and increased 3.75% from Q4 2015.
Gains in overall asking rents can be attributed to
increases in flex and R&D rents. With vacancy
decreasing, rents can be expected to continue
their upward march.
DALLAS/FT. WORTH:
This quarter overall average asking lease rates
increased for industrial spaces by one penny per
sq. ft., reflecting market sentiment that rent
growth is slowing following marked gains last
year. Vacancy in the market continued to
compress, and DFW remains well below
historical highs. With strong demand for space,
lease rates are anticipated to continue to rise.
EL PASO:
The market average asking industrial lease rate
increased by $0.03 to $4.07 per sq. ft. in the first
quarter of 2016. This pushed average rents up by
$0.30 per sq. ft., or 8.0%, compared a year ago.
The active market and sharp decreases in vacancy
also pushed overall average asking rates above
$4.00per sq. ft. for the first time ever last year,
and this upward trend should continue
throughout 2016.
HOUSTON:
Rates have remained relatively unchanged in Q1
2016 where the current citywide industrial average
asking gross rate per sq. ft. is $0.70 per month.
The average quoted gross monthly rent rates are
$0.55 per sq. ft. for warehouse/distribution space;
$0.88 for flex/service space; and $0.66 per sq. ft.
for manufacturing space.
MCALLEN:
Excluding cold storage use, the market wide
warehouse average asking lease rate fell by a mere
1.8% both this quarter and year-over-year to $3.83
per sq. ft. While rents remain well above
recessionary levels, the leveling off comes after a
busy 90 days where almost 80% of net absorption
was attributed to Class A product. This leasing of
greater competitive space likely shifted average
weights more heavily on Class B and Class C
availability pushing overall averages down.
SAN ANTONIO:
Average asking rates across the market once again
saw a decrease, falling $0.14 per sq. ft. quarterover-quarter. Rents closed the quarter at $7.11 per
sq. ft. on a NNN basis. Flex rates saw the brunt of
the decline, falling $0.12 per sq. ft., finishing at
$10.03 per sq. ft. Warehouse rates saw only a $0.02
fall, finishing the quarter at $5.43 per sq. ft., which
still remains a $0.06 per sq. ft. increase year-overyear.
© 2016 CBRE, Inc. |
4
C O N S TRU C TI ON S TA R TS S T R ON G. ‘ B I G D ’
M I G H T J U S T M E A N B I G D I S T RI BU TI ON
AUSTIN:
Despite record high rents and low vacancy rates,
construction of new industrial product remains
tepid. There is only 418,600 sq. ft. of industrial
product under construction in Austin, and the first
quarter of 2016 saw no new deliveries.
DALLAS/FT. WORTH:
Construction volume is the measure to watch in
Big D for 2016. Deliveries for the first quarter
totaled 4.9 million sq. ft. Pre-leasing activity
remained very strong with 2.6 million of the 4.9
million sq. ft., or 53%, of Q1 2016 deliveries
preleased. For 2015 deliveries, the pre-leased rate
averaged 45%. An estimated 21.4 million sq. ft. is
currently under construction in the market, and is
42% pre-leased. South Dallas remains popular
among developers with 38.7% of under
construction space located in the submarket.
EL PASO:
increased based on one new construction delivery.
MCS Industries took delivery of approximately
215,000 sq. ft. in Santa Teresa within the West
submarket. There were no additional industrial
projects under construction at the end of Q1 2016.
Although not yet confirmed, additional
construction projects are believed to be coming to
El Paso’s West submarket, including Santa Teresa.
Earlier reports indicated that developers are in
advanced planning to build new industrial
development.
HOUSTON:
A 1 million sq. ft. increase in construction starts
was observed quarter-over-quarter, as 13 new
projects broke ground representing just over 2.1
million sq. ft. of space. The bulk of this
development is concentrated in the Northwest and
Southwest submarkets. Twenty four buildings
delivered in Q1 2016, representing 2.7 million sq.
ft. of which 47% was preleased space. The market
delivered 1 million sq. ft. more this quarter than
Q4 2015, including a 10% increase in preleased
delivery space.
MCALLEN:
increased in Q1 2016 through the delivery of all
four construction projects that carried over from
2015. These included three new buildings along
with an expansion to an existing cold storage
facility that carried a combined occupancy of
83.7%. New space under construction increased
17.5% compared to last quarter resulting from
three fresh project starts in the last 90 days. Cold
storage demand continued fueling new
development, particularly within Pharr – which
became the largest gateway for produce out of
Mexico in 2015.
SAN ANTONIO:
Construction levels ended the quarter at 1,271,291
sq. ft., and almost all of these are projected to
deliver during 2016. If these projects make their
delivery schedules, the market will be on pace to
see the highest level of completed construction
since 2008, when 1.7 million sq. ft. of inventory
was added to the market.
© 2016 CBRE, Inc. |
5
Figure 8: Top Lease Transactions
.
Transaction Size
(SF)
Market
Tenant
Address
Submarket
AUSTIN
160,000
Texas State Health Services
7620 Metro Center Drive
Southeast
DALLAS/FT. FORTH
800,000
Bed Bath & Beyond
2900 S Valley Pkwy
Northwest Dallas
EL PASO
412,521
Eureka Electrolux
9600 Pan American Dr.
Lower Valley
HOUSTON
441,000
Advanced Auto
11810 N. Gessner
Northwest
MCALLEN
207,000
Confidential - Machinery & Appliances International Pkwy.
McAllen
Indo-Mim
South
SAN ANTONIO
59,831
911 Davy Crockett Rd
Figure 9: Top Sale Transactions
Transaction Size
(SF)
Market
Buyer
Address
Submarket
AUSTIN
241,564 JLM Investments
4501 Burleson Rd
Southeast
DALLAS/FT. FORTH
860,445 Confidential
1303 W Pioneer Pkwy
Great Southwest/Arlington
22 Spur Dr.
Northeast
EL PASO
50,000 Wallner Expac
HOUSTON
7120 Brittmoore Rd
Northwest
MCALLEN
211,208 Confidential - Food Processing
1010 E. Chapin St.
Edinburg
SAN ANTONIO
389,000 TowerJazz Texas Inc
9651 Westover Hills Blvd
Northwest
T E X A S S A L ES AC T I V I TY C O O L ED I N Q 1 , FA L L
B E L OW 1 2 M O N TH AV E R AG E
Data show that sales volume across the state cooled
off at the start of 2016 after a strong close during
the final 90 days of 2015. A total 9.3 million sq. ft.
transacted in the previous three months with
January reporting the highest volumes after
accounting for 37% of sales volume in the quarter.
While primary markets continued to capture the
largest share of sales volume, this segment is
currently the most deviated away from its 12month-average of 5.0 million sq. ft. per month.
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jan 2016
Feb 2016
Primary Markets
Non-Primary Markets
Mar 2016
Notes: Data exclude transfers, entity-level
exchanges, and partial interest sales. Non-Primary
data might occasionally account for locations
outside of CBRE market boundaries.
© 2016 CBRE, Inc. |
6
CONTACTS
Robert C. Kramp
Director of Research & Analysis
[email protected]
E. Michelle Miller
Research Operations Manager
[email protected]
Pedro Niño, Jr.
Sr. Research Analyst, El Paso, McAllen,
Cd. Juárez, Chihuahua City
+1 915 313 8816
[email protected]
Nicholas Ianetta
Research Coordinator, San Antonio
+1 210 253 6019
[email protected]
Miller Hamrick
+1 214 979 6532
[email protected]
CBRE OFFICES
Austin
Austin, TX 78701
Houston
Houston, TX 77056
Dallas
Dallas, TX 75201
McAllen
200 S. 10th St., Suite 1209
McAllen, TX 78501
El Paso
El Paso, TX 79901
San Antonio
Patrick Loewe
Research Coordinator, Austin
+1 512 499 4939
[email protected]
Research Gateway at
McAllen and San Antonio markets. El Paso and McAllen data exclude Flex space.
MARKETVIEW
State’s diverse industrial sector
produced year of solid gains
Vacancy Rate
6.3%
Net Absorption
8.2 MSF
Under Construction
30.5 MSF
Completions
5.0 MSF
• AUSTIN
Last year closed with 1,182,965 sq. ft. of positive
occupier demand, across a variety of industrial
property types. Rents here make Austin the most
expensive in Texas especially for back office flex
operations.
Figure 1: 2015 Texas Industrial Activity by Industry
Paper, Pulp, Packaging & Printing
Wholesale
Other-Services
Other
High-Technology MFG
Unknown
High-Technology MFG-Electronics
Warehousing/Storage
Energy Related MFG
Materials MFG-Plastics
Tenants took down 18 million sq. ft. in 2015, the
second-highest level experienced in the DFW market
in the past five years.
• EL PASO
Market demand increased annual net absorption to
1.6 million sq. ft., surpassing the high of 2007 and
pushed industrial vacancy down to 9.8%. Single-digit
industrial vacancy now is the new norm statewide.
• HOUSTON
The industrial outlook looks clear for occupiers and
landlords despite the office space overhang as
logistics drive warehouse demand and the expansion
on the east side of town continues in petrochemicals.
• MCALLEN
McAllen’s new industrial leases were enough to boost
annual net absorption past 2014 levels, dropping
vacancy by 280 basis points (bps) year-over-year.
• SAN ANTONIO
Activity closed the year-to-date total net absorption
past 1.3 million sq. ft., the second highest level since
2007, pushing vacancy down 60 (bps).
Texas: 3PL and So Much More
An annual aggregate of CBRE’s Top 25 transactions
for all markets show that activity across the state is
largely diverse. While Texas continued to attract
transportation, distribution, and logistics as the most
active industry, other industries are also worth nothing.
Expanding demographics continued spurring retail
supply chain operations, everything from food &
beverage to e-commerce, across the state. Durable
goods such as appliances and electronics also saw a
strong presence in 2015, along with motor vehicles &
parts manufacturing which placed in the top five
categories.
© 2016 CBRE, Inc. |
1
S TAT E W I D E E M P LOY M E N T U P I N ‘ 1 5 B U T L AG G E D U. S. F O R F I R S T T I M E I N T H E 2 1 S T C E N T U R Y
Total nonfarm employment across the state saw an annual growth of 1.4% in December 2015. Growth pushed
employment to 11.9 million after adding 166,900 jobs in the last 12 months. Although the additional jobs signal
continued growth, this appears to be softening and is the lowest year-over-year growth reported since September
2010. Positive U.S. job growth was also greater relative to the state for first time since 1999 at 1.9% year-over-year
this was caused by several factors, most notably a lower crude oil prices and the goods producing industry
continue to be a drag to the employment market. During December, Texas saw negative growth in
manufacturing and mining and logging employment while many service industries grew above 4% in the
trailing 12 months. In terms of industrial employment, wholesale trade and transportation and warehousing
ended the year up with positive employment growth.
CBRE Research continues to closely track the Houston MSA labor market given the recent oil price shock and
importance of that industry to the Bayou City economy. Data show that during the trailing 12-month period
Houston grew by 0.8% or 23,600 jobs. Although the year-over-year growth comes at a 66 month low, it remained
in the black. Houston has managed to either relocate some of the displaced workers or create new jobs in other
service industries.
Figure 2: Industrial Employment Breakdown, December 2015 (000’s)
AustinRound Rock
Industry
Dallas-Fort
Worth-Arlington
El Paso
Sugar Land
Texas
Manufacturing
56.2
256.1
17.4
242.3
6.0
46.0
849.3
Y-o-Y Growth (%)
-2.8
-2.7
1.1
-6.2
-1.7
1.1
-4.7
16.0
164.1
14.6
133.8
8.5
26.4
492.8
Y-o-Y Growth (%)
2.4
1.4
2.1
-1.8
2.3
4.2
0.6
Wholesale Trade
48.5
205.7
11.1
168.6
8.0
34.6
598.0
Y-o-Y Growth (%)
4.5
6.1
0.0
-2.2
1.2
1.1
1.3
120.7
625.8
43.0
544.7
18.4
107.0
1940.1
0.7
1.1
1.1
-4.0
0.6
1.8
-1.6
Total Industrial
Y-o-Y Growth (%)
Source: Bureau of Labor Statistics, Seasonally Adjusted, CBRE Research, January 2016.
700
140
600
120
500
100
400
80
300
60
200
40
100
20
0
Manufacturing
0
AustinRound Rock
El Paso
Wholesale trade
Source: Bureau of Labor Statistics, Seasonally Adjusted, January 2016.
© 2016 CBRE, Inc. |
2
A B S O R P T I O N S T R O N G A S S TAT E W I D E
S I N G L E D I G I T VAC A N C Y I S N E W N O R M A L
18
16
14
12
10
8
6
4
2
0
DFW
AUSTIN: There was continued growth in
absorption, which closed Q4 2015 with 414,337
sq. ft. This brings the year-to-date total for 2015
past 1.1 million sq. ft., nearly four and a half
times the level reached in the previous year This
also caused vacancy to fall to 8%.
DALLAS/FT. WORTH: The recent quarter
marks the 21st consecutive quarter of positive
net absorption for the DFW industrial market as
it posted 5.3 million sq. ft. in total market
absorption. With the three previous quarters’
impressive absorption, the year-to-date total
reached just under 18 million sq. ft., eclipsing
the 2014 total.
EL PASO: In the past 90 days, net absorption
1,600
1,400
1,200
1,000
800
600
400
200
0
El Paso
San Antonio
high of 1.6 million sq. ft. Net occupier demand
this past quarter decreased the overall market
vacancy by 270 bps year-over-year to levels
unseen during the current economic cycle.
HOUSTON: Vacancy increased slightly to 4.9%,
compared to 4.7% in Q3 2015 due to vacant
space deliveries. Yet, vacancy is still 2.0 percent
lower than the historical average of 6.9%.
Nevertheless, despite the perception of a
slowdown year-end absorption totals remained
strong closing the year at 6.3 million sq. ft.
MCALLEN: The final quarter of 2015 produced
a healthy net absorption despite a lower
number of transactions. Even so, Q4 2015
registered two deals larger than 100,000 sq. ft.
ultimately adding to the total 2015 annual net
absorption of 592,970 sq. ft. which dropped
total vacant sq. ft. by 25%.
SAN ANTONIO: The industrial market closed
the year with over 570,000 sq. ft. of positive net
absorption, marking the 19th straight positive
quarter. This also caused vacancy to fall 60
bps, down to 6.9%, over last year.
Austin
2014
was recorded at just under 370,000 sq. ft. and
closed 2015 with annual net absorption at a new
Houston
McAllen
2015
Vacancy (%)
22
20
18
16
14
12
10
8
6
4
2007 2008
2009
2010
Austin
Houston
2011
2012
2013
DFW
McAllen
2014
2015
El Paso
San Antonio
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007 2008 2009
Austin
Houston
2010
2011 2012
DFW
McAllen
2013
2014 2015
El Paso
San Antonio
© 2016 CBRE, Inc. |
3
$/SF
10.00
8.00
6.00
4.00
2.00
0.00
2007
2008
2009
Austin
2010
San Antonio
2011
Houston
2012
DFW
2013
2014
McAllen
El Paso
2015
El Paso and McAllen figures exclude Flex Space. Source: CBRE Research, Q4 2015.
‘ 1 5 R E N T S S P I K E I N AU S T I N A N D B I G D
AUSTIN:
Q4 2015 citywide asking rents showed more
vertical movement, a trend that happened in all
but one quarter in 2015, to a healthy $0.80 per sq.
ft. Year-over-year this is up $0.10 per sq. ft., one
of the highest of all time for Austin industrial.
DALLAS/FT. WORTH:
This quarter average asking lease rates increased
for industrial spaces by one penny per sq. ft.,
reflecting market sentiment that rent growth is
slowing following marked gains in previous
quarters this year. Vacancy in the market
continued to compress, and DFW remains well
below historical highs. With strong demand for
space, lease rates are anticipated to continue to
rise.
EL PASO:
increased by $0.02 to $4.04 per sq. ft. in the final
quarter of 2015. The 6.6% increase this year is
amongst the largest experienced by the local
market based on our dataset back to 2003. The
active market and sharp decreases in vacancy
also pushed overall average asking rates above
$4.00per sq. ft. for the first time ever.
HOUSTON:
Overall rents were unchanged in Q4 2015 although
rent growth might be plateauing; current average
monthly asking gross rates per sq. ft. citywide are
$0.69 per month. While most property types are
still achieving healthy rents, crane-served
warehouses could begin to see contracting rents.
The average quoted gross monthly rent rates are $0.48
per sq. ft. for warehouse/ distribution space; $0.86
per sq. ft. for flex/service space; and $0.73 per sq. ft.
MCALLEN:
The market wide average asking industrial lease rate
remained 0.5% above this time last year at $4.02 per
sq. ft. Cold storage rate inflation is also impacting
rents, as some available cold-storage properties are
asking above $10.00 per sq. ft. A “true” warehouse and
distribution average asking rents would yield $3.90
per sq. ft., up 0.5% from last year.
SAN ANTONIO:
For the first time since Q2 2013, the industrial
market saw a dip in average asking rates, falling
$0.23 per sq. ft. on a NNN basis. They closed the
year at $7.25 per sq. ft., which is still slightly higher
than where rates were just twelve months ago. The
market seems to be experiencing the effects of having
such a tight vacancy, as lower tier product is having a
greater impact on average asking rates of available
space.
© 2016 CBRE, Inc. |
4
3 0 . 6 M S Q. F T. I N T X C O N S T R U C T I O N P I P E L I N E :
.
J U S T U N D E R H A L F M I L L I O N B E I N G F L E X S PAC E
AUSTIN:
Austin industrial closed out the year with a solid
addition to the market boosting year to date total
to 821,657 sq. ft., the highest since 2009. It is also
worth noting that in that same year, 2009, vacancy
was 21.5% compared to the current 8.0% vacancy.
2016 will begin with a total 418,600 sq. ft. of
construction spread across 5 buildings.
DALLAS/FT. WORTH:
Deliveries for the quarter totaled 2.7 million sq. ft.,
bringing year-to-date deliveries to 19.6 million sq.
ft., easily the highest amount delivered to market
since the economic downturn. Pre-leasing activity
remained strong with 930,000 of the 2.7 million
sq. ft., or 34%, of Q4 deliveries preleased. For 2015
deliveries, the pre-leased rate averaged 45%. An
estimated 19.7 million sq. ft. is currently under
construction in the market.
EL PASO:
increased based on one new construction
deliveries. El Paso Water Utilities took delivery of
approximately 80,000 sq. ft. in the Lower Valley
submarket. 2015 closed with 267,456 sq. ft. of
delivered construction, all of which were built-tosuits. Additional construction may be coming to
Santa Teresa, where availability remains tight, in
the coming months. Earlier reports indicated that
two developers are in advanced talks to build more
than 250,000 Sq. ft. of speculative space and there
appears to be an additional 250,000 sq. ft. built-tosuit in the 2016 radar for a to-be-determined
tenant.
HOUSTON:
Softening construction starts this quarter were
expected and welcome after one of the strongest
development cycles in the Houston market. While
the Southeast submarket is still very active and
could see further new product, starts ground to a
halt in the second half of 2015. No new starts were
recorded outside the Southeast, driven by
downstream energy demand, and the Northwest,
Houston's logistics hub. Twenty eight buildings
delivered in Q4 2015 with the largest concentration
of development in the North and in the Southeast
with 340,463 sq. ft. delivered.
MCALLEN:
Inventory increased via the delivery of a cold storage
warehouse in Pharr of approximately 20,000 sq. ft.
for a produce distribution company. While no new
developments were started this quarter, work
continued on the three ongoing projects totaling
244,000 sq. ft. with an expected occupancy of 57%.
These included two speculative developments and a
built-to-suit property. With the high vacancy of
Class A space, it remains unlikely a developer would
deploy additional speculative construction beyond
active projects. However, CBRE Research is aware of
several built-to-suit projects that will likely deploy in
the coming months
SAN ANTONIO:
The market closed the year with one more project
finishing its construction, and adding over 55,000
sq. ft. to the market inventory. Perrin Creek - Bldg
2B, located in the Northeast submarket brought
year-to-date completed construction up to 542,321
sq. ft. the third highest recorded level. Three
projects, totaling over 680,000 sq. ft. of inventory,
are expected to have their construction completed
within the next three months, with over 340,000 sq.
ft. more anticipated to deliver three months later.
© 2016 CBRE, Inc. |
5
.
Transaction Size
(SF)
Market
AUSTIN
51,500
Tenant
Address
Submarket
Oskar Blues Brewery
10420 Metric Blvd Bldg C
North
DALLAS/FT. FORTH
630,000
Niagra Bottling
4685 Mountain Creek Pkwy
South Dallas
EL PASO
108,000
Confidential - Automotive MFG
12435 Rojas
East
HOUSTON
345,100
Gulf Winds International
411 Brisbane St
South
MCALLEN
111,350
Materbrand Cabinets
3101 W Military Hwy
McAllen
SAN ANTONIO
265,000
URS
333 Morris Witt St
South
Transaction Size
(SF)
Market
AUSTIN
Buyer
304,789 Cox Enterprises Inc.
DALLAS/FT. FORTH
1,128,227 Hillwood
EL PASO
NA NA
Address
Submarket
305 S Congress
South
501Danieldale Rd
South Dallas
NA
NA
HOUSTON
10565 Greens Crossing Blvd
North
MCALLEN
101,560 Confidential - 3PL
810 Trinity Dr
Mission
SAN ANTONIO
308,519 Watts Investments LLC
4340-4344 N IH-35
Northeast
T E X A S S A L E S AC T I V I T Y U P S H A R P LY I N
D E C E M B E R , AC C O U N T I N G F O R H A L F O F Q 4 2 0 1 5
Data show that sales volume across the state closed
the year in strong territory. A total 20.7 million sq.
ft. transacted in the previous 90 days with
December reporting some of the highest volumes of
the year after accounting for 52% of sales volume
in the quarter. Secondary markets also saw a more
active quarter in terms of share. These markets
accounted for 24% of traded sq. ft., in contrast to a
19% share in Q3 2015.
12
10
8
6
4
2
0
Oct 2015
Nov 2015
Primary Markets
Dec 2015
Non-Primary Markets
Notes: Data exclude transfers, entity-level
exchanges, and partial interest sales. Non-Primary
data might occasionally account for locations
outside of CBRE market boundaries.
© 2016 CBRE, Inc. |
6
CONTACTS
Robert C. Kramp
[email protected]
E. Michelle Miller
[email protected]
Pedro Niño, Jr.
Senior Research Analyst, El Paso,
McAllen, Cd. Juárez, Chihuahua City
+1 915 313 8816
[email protected]
Nicholas Ianetta
+1 210 253 6019
[email protected]
Miller Hamrick
+1 214 979 6532
[email protected]
CBRE OFFICES
Austin
Austin, TX 78701
Houston
Houston, TX 77056
Dallas
Dallas, TX 75201
McAllen
200 S. 10th St., Suite 1209
McAllen, TX 78501
El Paso
El Paso, TX 79901
San Antonio
Mark Rodgers
+1 512 499 4939
[email protected]
Research Gateway at
MARKETVIEW
Year’s homestretch: some
markets setting records, others
taking a breather
Vacancy Rate
6.6%
Net Absorption
6.3 MSF
Under Construction
24.9 MSF
Completions
5.9 MSF
• AUSTIN
Net absorption for the quarter sustained its robust
growth since the start of the year, finishing the
quarter at 361,552 sq. ft. new demand, causing
vacancy to fall to 8.1%.
Taking down nearly as much space by Q3 than it did
all of last year, DFW Q3 deliveries are nearly 47%
preleased. The direct and total Q3 vacancy are now
7.2% and 7.3%, respectively.
• EL PASO
Market demand increased year-to-date with a net
absorption of 1.2 million sq. ft., matching the
previous high of 2007.
• HOUSTON
The feverish pace of development has finally tapered
off; construction starts dropped by 79% from Q2
2015. While the outlook indicates some contraction,
overall metrics are y stable as positive growth weighs
in at nearly 500,000 sq. ft. for the year.
• MCALLEN
New industrial leases were enough to off-set the
largest reported quarterly vacancy so far in 2015.
• SAN ANTONIO
Year-to-date delivered construction closes at
487,000 sq. ft., with over 400,000 sq. ft. more
anticipated for the end of the year.
Source: Port of Houston Authority, 2015.
Sea and Land Port Expansions
As the Panama Canal expansion nears completion, the
Port of Houston has completed the first of two deeper
container terminals at Barbours Cut. The second at
Bayport, will be completed next year in anticipation of
the larger vessels set to come through Panama’s larger
locks. Texas land ports have also seen increased
activity and the need for expansion through the
resurgence of manufacturing in Mexico. Northbound
freight truck crossings through Texas land ports
reached record levels in 2014, 3.4 million, and are on
track to yet again surpass this year. These trucks
transport materials, components, and final consumer
goods to distribution hubs like Dallas/Fort Worth and
Houston as well as to numerous markets across the
U.S. In El Paso, an expanded port of entry is near
completion in Tornillo. South in the Valley of Texas,
officials in McAllen-Anzalduas secured funding for
what may emerge as a new commercial port of entry
untimely boosting trade and industrial demand.
© 2015 CBRE, Inc. |
1
E M P LOY M E N T
Total nonfarm employment across the state of Texas saw an annualized growth of 1.7% in Q3 2015. Growth
pushed employment to 11.8 million after a significant rebound in Q3 2015 which added 49,700 jobs, more than
three times those added in the previous quarter. Although slightly slower, Texas continues to outperform the
national labor market which reported a similar annualized gain of 1.7% during the same period, but remained
above the Texas unemployment rate of 4.2% at 5.1%. The six industrial metropolitan statistical areas (MSA) saw
suitable 12 month growth in September. San Antonio observed the largest growth of 3.7% year-over-year. Not far
behind, McAllen reported a gain of 3.6% followed by Dallas- Ft. Worth and Austin at 3.2% and 3.0%,
respectively. CBRE Research continues to closely track the Houston MSA labor market given the recent oil price
shock and importance of that industry to the Houston economy. Data show that during the trailing 12-month
period Houston grew by 1.2% or 34,300 jobs. Although the year-over-year growth comes at a 59 month low, it
remained in the black, as Houston has managed to either relocate some of the displaced workers or create new
jobs in other industries such as transportation, construction, and manufacturing of resins and petrochemicals.
Within industrial employment, See Figure 1, as expected with the crude pricing slump, the manufacturing
sector created the only drag across the state, negatively affecting four of the six metros while the transportation
sector saw the largest positive gain due to the vitality of the ecommerce and supply chain logistics industry.
Figure 1: Industrial Employment Breakdown, September 2015 (000’s)
AustinRound Rock
Industry
Dallas-Fort
Worth-Arlington
El Paso
Sugar Land
Texas
Manufacturing
56.7
258.4
17.1
244.3
6.1
46.1
857.7
Y-o-Y Growth (%)
-0.8
-1.4
0.1
-4.9
-4.5
0.0
-3.3
16.1
164.4
14.6
132.1
8.6
26.0
494.6
Y-o-Y Growth (%)
1.8
5.1
3.0
-1.9
4.0
4.5
2.7
Wholesale Trade
47.1
199.5
11.0
167.6
8.1
34.4
592.9
Y-o-Y Growth (%)
3.4
4.0
1.0
-1.8
2.9
3.6
1.7
119.9
622.4
42.7
544.1
22.8
106.5
1945.2
1.1
2.0
1.3
-3.2
1.2
2.2
-0.3
Total Industrial
Y-o-Y Growth (%)
Source: Bureau of Labor Statistics, Seasonally Adjusted, CBRE Research, November 2015.
700
140
600
120
500
100
400
80
300
60
200
40
100
20
0
Manufacturing
0
AustinRound Rock
El Paso
Wholesale trade
Source: Bureau of Labor Statistics, Seasonally Adjusted, November 2015.
© 2015 CBRE, Inc. |
2
A B S O R P T I O N A N D VAC A N C Y
AUSTIN: Q3 2015 net absorption of 361,552
sq. ft. brings the year-to-date total for 2015 up
to 768,62 sq. ft., nearly three times the level
reached in the previous year with one quarter
to go. This also caused vacancy to fall another
120 bps.
DALLAS/FT. WORTH: This quarter marks the
20th consecutive quarter of positive net
14
12
10
8
6
4
2
0
DFW
Houston
total market absorption. The year-to-date total
1,200
reached just over 12.7 million sq. ft., putting
1,000
2015 year-to-date a mere 115,795 sq. ft. away
800
from the total absorption level for all of 2014.
600
absorption as it posted 2.6 million sq. ft. in
400
EL PASO: The net absorption of just under
300,000 sq. ft. raised the annual total through
the first three quarters of 2015 to 1.2 million
200
0
El Paso
San Antonio
2014
sq. ft. This positioned the market on track to a
new cycle high for annual net absorption.
Demand reduced overall market vacancy rate
50 bps quarter-over-quarter and 300 bps yearover-year.
HOUSTON: Despite the anticipated slowing in
leasing activity, absorption was up in Q3 2015
with a net absorption of 1.8 million sq. ft. The
year-to-date total of 4.9 million sq. ft. is
currently at 61% of what was reported for all of
2014. The current vacancy rate is down 10
basis points in the past 90 days.
MCALLEN: The regional industrial market
continued in transition after recording 4,638
sq. ft. of positive net absorption in Q3 2015,
closing a two year positive streak in net gain
area demand. This progressive activity pushed
vacancy down to a new cycle-low reaching
9.5%.
SAN ANTONIO: Q3 2015 posted another
strong quarter of net absorption over 200,000
sq. ft. for the quarter. The year-to-date total for
2015 now stand at 807,086 sq. ft. of positive
net absorption, 220,000 sq. ft. more than just a
year ago.
McAllen
Austin
YTD Q3 2015
Vacancy (%)
22
20
18
16
14
12
10
8
6
4
2007 2008
2009
2010
Austin
Houston
2011
2012
2013
DFW
McAllen
2014 Q3 2015
El Paso
San Antonio
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007 2008 2009
Austin
Houston
2010
2011 2012
DFW
McAllen
2013
2014 Q3 2015
El Paso
San Antonio
© 2015 CBRE, Inc. |
3
$/SF
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
2007
2008
2009
Austin
2010
San Antonio
2011
Houston
2012
DFW
2013
2014
McAllen
El Paso
Q3 2015
L E A S E R AT E S
AUSTIN:
After back-to-back quarters of growth in the
citywide average asking rates, Q3 2015 saw rents
remain steady at $0.76 per sq. ft. on a NNN basis.
In the past year, rents have increased $0.06 per
sq. ft. Across development types, warehouse
rents saw an increase of $0.03 per sq. ft., and
closed at $0.63 per sq. ft.
DALLAS/FT. WORTH:
for industrial spaces by $0.20 per sq. ft. erasing
the temporary decline in the previous quarter.
Despite a flat vacancy, DFW remains well below
historical highs. Additionally, with continues
strong demand for space, lease rates are
anticipated to continue to rise.
EL PASO:
increased by $0.15 to $4.02 per sq. ft. in Q3 2015.
The 3.9% quarter-over-quarter and 7.8% yearover-year increases are amongst the largest
increases experienced by the local market based
on our dataset back to 2003. The active market
and sharp decreases in vacancy also pushed
overall average asking rates above $4.00per sq. ft.
for the first time ever.
HOUSTON:
Overall rents were unchanged in Q3 2015 after
increasing steadily over the past year; current
average monthly asking gross rates per sq. ft.
citywide are $0.69 per month. Concessions,
however, increased this quarter including free rent
especially in new properties and above standard
tenant improvement allowances. The average
quoted gross monthly rent rates are $0.48 per sq.
ft. for warehouse/ distribution space; $0.86 per sq.
ft. for flex/service space; and $0.73 per sq. ft.
MCALLEN:
The market wide average asking industrial lease fell
by 1.7% this quarter, but remained 2.8% above this
time last year. While the gain from last year reflects
market improvement, the quarterly drop was result of
two cold-storage transactions which removed
availability from the average at asking rates above
$10.00 per sq. ft. If cold-storage is excluded, “true”
warehouse and distribution average asking rents
would yield $3.98 per sq. ft., up 1.3% from last
quarter.
SAN ANTONIO:
The slowdown that the market has been experiencing
in average asking rents continues, as rents rose only
$0.02 per sq. ft. on an annual NNN basis. A 33%
growth compared to the increase experienced in the
previous quarter, average asking rates closed Q3 2015
at 7.48 per sq. ft. Unlike Q2 2015, where both flex and
warehouse product saw increases, only warehouse saw
rates rise quarter-over-quarter.
© 2015 CBRE, Inc. |
4
CONSTRUCTION
.
AUSTIN:
The year-to-date product delivered to the market
remains at 199,487 sq. ft., as there were no new
buildings delivered to the market by the close of
Q3 2015. This is 378,622 sq. ft. below how much
new product came onto the market in the previous
year. The product currently in development also
saw no change quarter-over-quarter, closing the
quarter at 719,000 sq. ft. This is also nearly
250,000 sq. ft. above where construction levels
were a year ago, when over 469,000 sq. ft. was in
development.
DALLAS/FT. WORTH:
Deliveries totaled 3.8 million sq. ft. in Q2 2015,
less than half the amount of completions from last
quarter, when DFW posted the highest amount of
quarterly new inventory in CBRE’s tracked history.
Because of the fewer deliveries and steady amount
of starts, the under construction pipeline
remained relatively flat over the quarter, totaling
just over 14 million sq. ft. of projects underway.
The pre-leased rate for space under construction
rose from 20% in Q1 2015 to 36% in Q2 2015.
EL PASO:
The supply of industrial buildings increased based
on three new built-to-suit construction deliveries
totaling 187,456 sq. ft. The market also registered
the start of two additional built-to-suit
construction projects. MCS, a picture frame
manufacturer on both sides of the U.S. – Mexico
border, started construction on their 2015,000 sq.
ft. facility in Santa Teresa, New Mexico located in
the West submarket. On the opposite end of town,
El Paso Water utilities started construction on a
80,000 sq. ft. building in the Lower Valley.
although a much improved market, there remains
a relatively ample amount of vacant space. Because
of this, it is unlikely that a developer would build
on a speculative basis.
HOUSTON:
Construction is beginning to slow after a record
breaking construction cycle. Developers have taken
a cautious stance given sluggish employment
growth and thus decreasing demand. Twenty three
warehouse buildings delivered in Q3 2015 with the
largest concentration of development in the North
(13 projects totaling 509,107 sq. ft.) and in the
Northwest with seven projects at 639,588 sq. ft.
delivered. These markets have dominated the
construction pipeline this cycle, but the Southeast
submarket is gaining momentum amidst current
downstream growth.
MCALLEN:
increased in Q3 2015 through the delivery of a
warehouse in Pharr of approximately 10,000 sq. ft.
for a third-party-logistics company. While no new
developments were started this quarter, work
continued on the four ongoing projects totaling
264,000 sq. ft. with an expected occupancy of
64%.These included two speculative developments,
a built-to-suit, and one expansion to an existing cold
storage property. With the high vacancy rate of Class
A space, it remains unlikely that a developer would
active projects.
SAN ANTONIO:
Product under construction closed the quarter at 1.4
million sq. ft., the highest level reached since 2008.
Construction began on the Cornerstone Industrial
building, a 144,000 sq. ft. flex building located in
the Northeast submarket. The North Central also
saw a building break ground in the 40,000 sq. ft.
Gulfmart Bend building, which will further add
inventory to the flex market. The biggest addition to
the market belongs to the new 306,880 sq. ft.
distribution center under construction for Conns.
Product under construction is currently 21%
preleased. The market saw one building deliver to
the market in the completion of South Park
Industrial Building 2. The 60,000 sq. ft. distribution
building was 100% preleased at the time of
completion by Custom Fab.
© 2015 CBRE, Inc. |
5
.
Transaction Size
(SF)
Market
AUSTIN
DALLAS/FT. FORTH
Tenant
Address
Submarket
152,403
Educational Testing Services
6231 E Stassney Dr.
Southeast
1,002,620
Confidential e-Commerce User
15101 North Beach St.
North Fort Worth
EL PASO
264,729
Undisclosed
9820 Railroad Dr.
Northeast
HOUSTON
261,990
GE
16250 Port Northwest Dr.
Northwest
MCALLEN
50,000
WorldWise Inc.
6001 International Pkwy.
McAllen
Confidential
1410 Callaghan Rd.
Northwest
SAN ANTONIO
193,908
Transaction Size
(SF)
Market
AUSTIN
Buyer
Address
292,000 Casa Marco Texas II LLC
DALLAS/FT. FORTH
3,406,594 Confidential
Submarket
301 W Howard Ln.
Northeast
1901 - 2401 Danieldale Rd.
South Dallas
EL PASO
109,000 Confidential - Plastics Manufacturer 9033 Billy The Kid St.
Lower Valley
HOUSTON
240,000 Centerpoint
8786 Wallisville Rd.
Northeast
1701 E Industrial Blvd.
Hidalgo
19500 Bulverde Rd.
North Central
MCALLEN
40,000 Mesquite Tree Group
SAN ANTONIO
559,258 CST Real Estate Holdings, LLC
T E X A S S A L E S AC T I V I T Y
Despite a drop in volume from Q2 2015, data show
that sales across the state remained at healthy
levels in Q3 2015. A total 17.9 million sq. ft. traded
hands in the previous 90 days with September
reporting a sharp rebound after accounting for
55% of sales volume in the quarter. Primary
markets also saw a more active quarter in terms of
share. These markets accounted for 81% of traded
sq. ft., in contrast to a 57% share in Q2 2015. The
majority of the activity reported is associated with
institutional owners both as sellers and buyers.
12
10
8
6
4
2
0
Jul 2015
Aug 2015
Primary Markets
Sep 2015
Non-Primary Markets
Note: Non-Primary data might occasionally
account for locations outside of CBRE market
boundaries such as Laredo and Waco, TX.
© 2015 CBRE, Inc. |
6
MARKETVIEW
TEXAS INDUSTRIAL
CONTACTS
Robert C. Kramp
[email protected]
E. Michelle Miller
[email protected]
Pedro Niño, Jr.
Research Analyst, El Paso, McAllen,
Ciudad Juárez, Chihuahua City
+1 915 313 8816
[email protected]
Nicholas Ianetta
+1 210 253 6019
[email protected]
Miller Hamrick
+1 214 979 6532
[email protected]
CBRE OFFICES
Austin
Austin, TX 78701
Houston
Houston, TX 77056
Dallas
Dallas, TX 75201
San Antonio
El Paso, McAllen
El Paso, TX 79901
Mark Rodgers
+1 512 499 4939
[email protected]
Research Gateway at
MARKETVIEW
International trade:
Texas strong
Vacancy Rate
6.7%
Net Absorption
Under Construction
6,635,637 SF
26,505,279 SF
Completions
8,588,197 SF
On a Record Pace
Building on a record year, during the first five
months of 2015, the Port of Houston Authority
handled more than 16 million tons of cargo, an
increase of 9%, compared to the same period
last year. Additionally, activity at the Bayport
and Barbours Cut terminals continues to grow
at an accelerated pace, with loaded container
units increasing 23% compared to May 2014.
Land Ports
The recent manufacturing activity upsurge in
Mexico, largely driven by substantial
investments in the automotive sector, has
trickled into positive demand to Texas’ industrial
border markets. These markets play a larger
role in global supply chain operations as their
ports of entry account for more than 81% of the
$500 billion annual trade with Mexico, which
creates an estimated more than 6 million U.S.
jobs, 463,000 in Texas alone.
Source: Port of Houston Authority, 2015.
Source: Brian Kanof, 2015.
Construction Across the State
New industrial construction across Texas remains in full swing as six of its major industrial markets
continue to see projects break ground due to overall occupancies being in the high-90s. Through Q2
2015, CBRE Research identified a total of 158 projects currently underway amounting to 26.5 million
sq. ft., of which 36 percent is pre-leased. This is being driven by the state’s position as a major
distribution hub in domestic and global supply chains to major population centers and with the
increased influence from emerging trends such as the ever-expanding e-commerce industry.
© 2015 CBRE, Inc. |
1
Total nonfarm employment across the state of Texas saw an annualized growth of 2.3% year-over-year, or
270,000, in the month of June marking a 62nd consecutive month of positive growth. Although slightly slower,
Texas continues to outperform national growth which reported a smaller gain of 2.1% during the same period.
The six industrial metropolitan statistical areas (MSA) saw suitable annual growth in June. Dallas- Ft. Worth
witnessed the largest growth of 3.4% year-over-year. Not far behind, Austin reported a gain of 3.3% followed by
San Antonio and McAllen both at 2.8%. It is worth mentioning that the Houston MSA added nearly 57,000 jobs
during the same period. This 12-month time frame is significant given that in July 2014 was around the time
that the price of crude began its plummet. Although the number of year-over-year jobs added comes at a 48
month low, it remained in the black, highlighting Houston area employers’ ability to either relocate some of the
displaced workers or create new jobs in other industries such as transportation, construction, and
manufacturing of resins and petrochemicals.
Within industrial employment, See Figure 1, as expected with the crude pricing slump, the manufacturing
sector created the only drag across the state, negatively affecting five of the six metros while the transportation
sector saw the largest positive gain due to the vitality of the ecommerce and supply chain logistics industry.
Figure 1: Industrial Employment Breakdown, June 2015 (000’s)
AustinRound Rock
Industry
Dallas-Fort
Worth-Arlington
El Paso
Sugar Land
Texas
Manufacturing
57.1
260.7
17.3
246.1
6.1
45.7
863.9
Y-o-Y Growth (%)
(1.4)
(0.6)
0.9
(-3.2)
(-4.6)
(1.0)
(2.4)
16.4
163.4
14.3
135.6
8.3
25.6
490.5
Y-o-Y Growth (%)
3.2
6.9
1.1
1.3
2.6
4.1
3.4
Wholesale Trade
46.2
196.9
11.0
169.7
8.0
34.1
588.3
Y-o-Y Growth (%)
Total Industrial
Y-o-Y Growth (%)
3.1
4.1
0.6
.9
1.5
4.0
2.4
119.7
621.0
42.5
551.4
22.4
105.4
1,942.7
0.9
2.8
0.9
(0.9)
0.2
1.8
0.4
Source: Bureau of Labor Statistics, Seasonally Adjusted, August 2015.
Secondary/ Tertiary market Employment (000’s)
700
140
600
120
500
100
400
80
300
60
200
40
100
20
0
0
Manufacturing
AustinRound Rock
El Paso
Wholesale trade
Source: Bureau of Labor Statistics, Seasonally Adjusted, August 2015.
© 2015 CBRE, Inc. |
2
ABSORPTION AND VACANCY
AUSTIN: Robust demand in the first six
months of the year pushed net absorption
above last year’s total figure. The 186,802 sq.
ft. of direct absorption in Q2 2015 reduced
vacancy by 230 basis points year-over-year to
the single-digits of 9.2%
12
10
8
6
4
2
DALLAS/FT. WORTH: For the 19th straight
quarter, the Metroplex posted positive net
absorption. The 4.2 million sq. ft. of
occupier demand yields a year-to-date total
of nearly 10.2 million sq. ft., the highest
mid-year absorption for DFW since 2000.
EL PASO: The vigorous industrial market
reported a net absorption larger than any
quarter in close to eight years pushing
occupancy to near 90%. Vacancy for
competitive, Class A space under 100,000 sq.
ft. is the tightest segment at 2.7%.
HOUSTON: Even though leasing activity has
taken a breather, Q2 2015 posted positive
net absorption of 1.1 million sq. ft. and the
market has seen 17 consecutive quarters of
positive net absorption totaling more than
27 million sq. ft. The current vacancy rate is
at 4.8%, down 10 basis
points in the past 90 days, making it the
snuggest in the state.
MCALLEN: The nearly two-year long
positive streak is the lengthiest since CBRE
began tracking the market in 2009 and has
resulted in more than 920,000 sq. ft. of net
occupier demand and ultimately decreased
the overall market vacancy by full
percentage quarter-over-quarter and by
2.3% year-over-year to 9.7%.
SAN ANTONIO: Posting 216,204 sq. ft. for
more than four years, demand dropped
vacancy another 20 basis points (bps)
finishing at 7.4%. This also marks the
eighth straight quarter of vacancy remaining
below 10%.
0
DFW
Houston
Secondary/ Tertiary Market Absorption (000’s SF)
1,000
800
600
400
200
0
El Paso
San Antonio
2014
McAllen
Austin
YTD Q2 2015
Vacancy (%)
19
14
9
4
2007
2008
2009
2010
Austin
Houston
2011
2012
2013
DFW
McAllen
2014 Q2 2015
El Paso
San Antonio
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007 2008 2009
Austin
Houston
2010
2011 2012
DFW
McAllen
2013
2014 Q2 2015
El Paso
San Antonio
© 2015 CBRE, Inc. |
3
$/SF
8.00
7.00
6.00
5.00
4.00
3.00
2.00
2007
Austin
2008
San Antonio
2009
Houston
DFW
2010
McAllen
2011
2012
2013
2014
Q2 2015
El Paso
AUSTIN:
Asking rents for all categories of industrial
space once again appeared to be on the rise
again this quarter, following gains made last
quarter. This is a new pattern after rents had
moved sideways for several years. Increases in
the citywide average have been seen in recent
quarters, but that was mostly due to increases
in flex rates. It appears that warehouse space
has begun to follow suit. The market wide
average asking rate finished the quarter at
$0.76, a 4.1%.
DALLAS/FT. WORTH:
This quarter average asking lease rates decreased
for industrial spaces by $0.06 per sq. ft. erasing
all gains in the previous quarter as available
space increased, particularly in the Ft. Worth
area. Despite marginally increasing vacancy,
DFW remains well below historical highs.
Additionally, with strong demand for space, lease
rates are anticipated to continue to rise.
EL PASO:
The average asking industrial lease rate increased
by $0.10 to $3.87 per sq. ft. in Q2 2015. The
quarter-over-quarter increase of 2.7% is the
largest gain in three years. As expected with a
sustained decline in vacancy, the Q2 2015 average
asking rent is also 3.8% above the same time last
year. El Paso landlords also have more leverage
negotiating compressed concessions, such as
free rent and tenant improvements.
HOUSTON:
Overall rents were unchanged in Q2 2015; current
average monthly asking gross rates per sq. ft. citywide
are $0.69 per month. Still, these rates have steadily
increased during the prior 12 months ending Q2 2015
with a 4.5% escalation since Q2 2014. Going forward,
CBRE Econometric Advisors expects 4.3% annual
average rent growth through 2017 as oil price impacts
are limited to those Houston submarket’s most
exposed to the inverse volatility between the upstream
and downstream energy sectors – i.e.: the Southeast
and South submarkets.
MCALLEN:
Improved market conditions pushed the market
average asking industrial lease rate up by 1.0% this
quarter and by 5.4% from this time last year to
$4.10 per sq. ft. This is the seventh consecutive
quarter with an average asking rate increase. Cold
storage rate inflation is also impacting submarkets
like Pharr, where average asking lease rates have
surpassed $5.00 per sq. ft. as some available
properties are asking as much as $10.80 per sq. ft.
SAN ANTONIO:
While experiencing another quarter rents on the
rise, the rate at which they grew slowed for the
second consecutive quarter. Asking rents increased
another $0.07 per sq. ft., and finished the quarter
at $7.47 per sq. ft. Unless rates continue to see
increases throughout the market, it is possible that
the market could see rates fall as buildings with
higher rates continue to become 100% occupied.
© 2015 CBRE, Inc. |
4
CONSTRUCTION
.
AUSTIN:
The Northeast submarket delivered 89,600 sq. ft.
this quarter of warehouse space at 8024 Exchange
Drive. This was the second building to deliver in
2015 and brought the year-to-date completions
total to 199,487 sq. ft. At the end of Q2 2015 there
were 7 projects underway for 719,000 sq. ft. of new
industrial space. This was a quarter-over-quarter
increase of more than 359,464 sq. ft. Q2 2015.
DALLAS/FT. WORTH:
less than half the amount of completions from last
quarter, when DFW posted the highest amount of
quarterly new inventory in CBRE’s tracked history.
Because of the fewer deliveries and steady amount
of starts, the under construction pipeline
remained relatively flat over the quarter, totaling
just over 14 million sq. ft. of projects underway.
The pre-leased rate for space under construction
rose from 20% in Q1 2015 to 36% in Q2 2015.
EL PASO:
El Paso’s industrial market had one project under
construction at the end of Q2 2015. Schneider
Electric’s ongoing built-to-suit activity will add
126,456 sq. ft. of new construction to El Paso’s
West submarket once delivered in Q3 2015. The
recently announced built-to-suit project for
MCS Industries in Santa Teresa is expected to start
early July 2015. The $11.1 million, 215,000 sq. ft.
industrial development is expected to deliver early
2016. Although a much improved market, there
remains a relatively ample amount of vacant space.
Because of this, it is unlikely that a developer
would build on a speculative basis.
HOUSTON:
Construction remains on the fast track with 72
buildings underway, totaling 10.3 million sq. ft. in
the greater Houston industrial market.
Construction completions are advancing with 41
buildings delivered, totaling 4.6 million sq. ft.
during Q2 2015 compared to Q1 2015 with 23
buildings delivered, totaling 1.5 million sq. ft.
Houston’s industrial new construction pipeline
will add (much) needed supply into a (very) tight
market, especially in the larger markets of the
Northwest, North and Southeast.
MCALLEN:
This quarter marked the start of an additional
100,000 sq. ft. construction project in Pharr. This
bring total under construction to 274,000 with an
expected occupancy of 65%. The Pharr Bridge
Business Park development continued marketing
availability through future built-to-suits. The 30acre master plan will feature five Class A built-tosuit properties ranging from 30,000 to 100,000 sq.
ft. in size. With the high vacancy rate of Class A
space, it remains unlikely that a developer would
active projects.
SAN ANTONIO:
Product delivered to the market in 2015 has
already surpassed the total experienced in all of
the previous year. With the delivery of Thousand
Oaks Business Park 4, a 66,405 sq. ft.
warehouse/distribution building, total
construction completed has reached over 420,000
sq. ft. Before 2013, when over 1.2 million sq. ft.
was delivered, this is the highest level since 2008.
Construction began on another project in the
market, which will add 155,000 sq. ft. of flex space
to the Northeast submarket upon completion. Two
more buildings are also expected to be completed
by the end of the year, which would bring
completed construction above 1 million sq. ft.
© 2015 CBRE, Inc. |
5
.
Transaction Size
(SF)
Market
Tenant
Address
Submarket
AUSTIN
122,400
Confidential
6301 E Stassney Ln
Southeast
DALLAS/FT. FORTH
500,000
Confidential - Retail
33333 LBJ Fwy
South Dallas
EL PASO
130,000
Confidential - 3PL
1320 Goodyear Dr.
East
HOUSTON
400,000
Foxconn
8303 Fallbrook Dr
Northwest
MCALLEN
120,340
Confidential
George McVay
McAllen
SAN ANTONIO
132,000
Menlo Logistics
6413 Tri-County Pky
Northeast
Transaction Size
(SF)
Market
AUSTIN
DALLAS/FT. FORTH
Buyer
Address
Submarket
Stonehollow Industrial Park
North
1,163,465 Confidential
Pioneer 360 Business Center
Great SW/ Arlington
EL PASO
Vista Del Sol Industrial Area - East
East
HOUSTON
262,095 Lexington Realty Trust
7007 FM 362
Northwest
MCALLEN
676,952 Dalfen America Corp.
Sharyland
McAllen
752-762 Isom Rd
North Central
SAN ANTONIO
46,969 Zampic LLC
Texas Sales Activity:
Sales data show that sales across the remained at
a healthy level in Q2 2015. A total 29.6 million
sq. ft. traded hands in the previous 90 days with
May being the highest volume month. Despite a
slowdown in June totals, data saw a significant
activity increase by secondary and tertiary Texas
industrial markets which capture 43.% of 7.2
million Sq. ft. The majority of the activity
reported is associated with institutional owners
both as sellers and buyers.
14
12
10
8
6
4
2
0
Apr 2015
Primary Markets
May 2015
Jun 2015
Secondary & Tertiary Markets
Note: Secondary & Tertiary data might
occasionally account for locations outside of
CBRE market boundaries such as Laredo and
Lubbock, TX.
© 2015 CBRE, Inc. |
6
MARKETVIEW
TEXAS INDUSTRIAL
CONTACTS
Robert C. Kramp
[email protected]
E. Michelle Miller
[email protected]
Pedro Nino, Jr.
Ciudad Juárez, Chihuahua City
+1 915 313 8816
[email protected]
Nicholas Ianetta
+1 210 253 6019
[email protected]
Patrick Loewe
+1 512 499 4939
[email protected]
CBRE OFFICES
Austin
Austin, TX 78701
Houston
Houston, TX 77056
Dallas
Dallas, TX 75201
San Antonio
El Paso, McAllen
El Paso, TX 79901
Miller Hamrick
+1 214 979 6532
[email protected]
Research Gateway at
MARKETVIEW
Texas unemployment rate at
or below national rate since
December 2006
Vacancy Rate
Net Absorption
6.9%
Under Construction
1,473,886 SF
Completions
4,930,902 SF
2,123,237 SF
Figure 1: Texas Unemployment
Unemployment Rate (%)
12
10
8
6
4
2
0
2000
2001
2002
Austin
2003
DFW
2004
2005
El Paso
2006
2007
Houston
2008
2009
2010
McAllen
2011
2012
San Antonio
2013
Texas
2014 Mar 2015
U.S.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics, Not Seasonally Adjusted, March 2015.
According to county-level data released by the Texas
Office of the State Demographer, Texas is projected to
roughly double in size between now and 2050 with the
majority of Texas counties experiencing continued steady
population growth. This is particularly the case for
suburban counties surrounding the large urban centers
of Austin, Dallas-Fort Worth, Houston and San Antonio.
While many of the large urban counties are also
projected to experience growth rates of over 50%, Dallas
County is projected to grow at a slower pace,
experiencing a growth rate of 40% between 2010 and
2050. Other counties that are projected to experience
rapid growth between now and 2050 are counties along
the southern border and select counties in the Panhandle
AUSTIN-ROUND ROCK
region. The projections suggest a continued population
decline in a number of counties in West Texas and a few
counties in parts of East Texas.
Number three based on percent growth is Fort Bend County,
Hays County is projected to be the fastest-growing county by
percentage in the state. According to the numbers,
demographers project Hays County will grow by 464% by 2050,
with more than 666,900 new residents growing its population to
825,070 over the next 35 years.
DALLAS-FORT WORTH-ARLINGTON
Next in terms of percent growth is Collin County, north of Dallas,
which demographers project will grow by 386% over the next 35
years, with the addition of more than 3 million residents growing
its population from 782,341 to 3.8 million.
HOUSTON-THE WOODLANDS-SUGAR LAND
southwest of Houston, projected to grow by 368% over the next
35 years, with the addition of more than 2 million residents
growing its population from 585,375 to 2.7 million.
© 2015 CBRE, Inc. |
1
MARKETVIEW TEXAS INDUSTRIAL
The Texas Workforce Commission reported that
the Metropolitan Statistical Area (MSA) Total
Nonagricultural Wage and Salary Employment (not
seasonally adjusted) grew by 18,600 positions in
March immediately following a revised increase of
Nonfarm Employment within the MSAs grew by
307,700 jobs. This marked 59 consecutive months
of annualized job growth for the areas, with a
March 2015 annual growth rate of 3.0%.
Employment grew over the year in 24 areas, led by
72,600 jobs in February. The March 2015 gain was
down from the five-year average March increase of
74,200 jobs. Since January 2015, 91,200 jobs have
been added, which was the smallest gain for this
time frame since 2009, when there was an 8,900job decline. The Houston-The Woodlands-Sugar
Land MSA led all areas with a gain of 5,500 jobs
over the month. Since March 2014, Total
the Dallas-Plano-Irving area with 91,000 jobs
added. The Financial Activities industry, which
includes commercial banks, credit unions,
insurance agencies, brokers, and offices of real
estate agents, grew by 2,800 jobs over the month.
This increase marked two consecutive monthly
gains starting with a revised addition of 3,800 jobs
in February.
Figure 2: Employment, Texas Metropolitan Statistical Areas
1,400
1,200
1,000
800
600
400
200
0
Mining, Logging, Manufacturing Transportation,
Construction
Warehousing,
Utilities
Information
Austin-Round Rock
Houston-The Woodlands-Sugar Land
Financial
Activities
Professional, Education, Health Leisure,
Business Services Services
Hospitality
Dallas-Fort Worth-Arlington
McAllen-Edinburg-Mission
Other Services
Government
El Paso
San Antonio-New Braunfels
Source: Texas Workforce Commission, MSA Employment, Not Seasonally Adjusted, March 2015.
Figure 3: Metropolitan Statistical Areas Employment Breakdown (000’s)
Industry
Austin
Round Rock
Dallas
Fort Worth
Arlington
El Paso
Houston
The Woodlands
Sugar Land
McAllen
Edinburg
Mission
San Antonio
New Braunfels
Texas
Mining, Logging, Construction
49.9
198.1
12.9
319.9
10.3
58.1
975.1
Manufacturing
57.9
262.7
17.3
254.7
6.3
46.0
878.7
15.9
156.8
11.2
135.6
8.3
25.3
487.6
Information
25.6
81.6
14.2
33.2
2.3
21.6
204.1
Financial Activities
52.6
79.6
11.6
148.8
9.0
84.3
711.3
Professional, Business Services
150.6
546.7
30.2
466.1
15.3
124.4
1,556.6
Education, Health Services
110.1
411.2
42.1
362.1
66.0
149.3
1,567.2
Leisure, Hospitality
108.3
340.6
33.2
295.1
22.7
118.5
1,216.3
Other Services
40.3
115.3
9.7
103.4
6.3
35.0
412.1
Government
174.3
411.6
68.6
386.2
57.2
166.0
1,864.4
Total Nonfarm
929.7
3,337.3
295.1
2,971.2
248.0
968.0
11,728.0
Source: Bureau of Labor Statistics, Nonfarm Employment, Not Seasonally Adjusted, March 2015.
© 2015 CBRE, Inc. |
2
VACANCY AND ABSORPTION
Vacancy (%)
AUSTIN: Net absorption presses higher for a third
straight quarter and comes in at 158,274 sq. ft. and
total vacancy decreases to 10.5%. Despite low
vacancy and healthy demand, there has been
relatively little movement in industrial
construction.
DALLAS/FT. WORTH: Q1 2015 has been another
strong quarter overall for the Dallas/Fort Worth
industrial market. With positive net absorption
for the 18th consecutive quarter at 6.0 million
sq. ft., DFW continues to outperform much of
the nation. Q1 2015 saw DFW’s total vacancy rate
rise 40 basis points to 7.3%.
EL PASO: The active El Paso industrial market
began the year with positive net absorption the first
time since 2011. The overall industrial vacancy rate
continued to decline to 11.8%. This emphasizes
the optimistic momentum of the local market. The
vacancy rate for competitive, Class A space under
100,000 sq. ft. remained as the most “tight”
segment at 2.6%.
HOUSTON: Houston’s average industrial
vacancy rate dropped 10 basis points from
5.0% as of Q4 2014 to 4.9%, Q1 2015 and 2 million
sq. ft. of inventory was absorbed. Amidst concerns
regarding the energy industry, new local
distribution or more specialized, crane-served type
industrial leases are taking place.
22
20
18
16
14
12
10
8
6
4
2007
2008
2009
2010
Austin
Houston
2011
2012
2013
DFW
McAllen
2014 Q1 2015
El Paso
San Antonio
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007
2008
2009
2010
Austin
Houston
2011
2012
2013
DFW
McAllen
2014 Q1 2015
El Paso
San Antonio
Absorption (SF)
MCALLEN: Q1 2015 marked a sixth consecutive
quarter of positive net absorption for the McAllen
industrial market. Continued progressive activity
decreased the market vacancy rate by 80 basis
points year-over-year to 10.7%.
SAN ANTONIO: Q1 2015 saw the highest levels of
positive absorption for a first quarter since 2008,
which also marks the 16th straight quarter where
absorption was positive. This caused vacancy to fall
10 basis points quarter-over-quarter to 7.6%.
19,500
16,500
13,500
10,500
7,500
4,500
1,500
-1,500
2007
Austin
2008
2009
DFW
2010
El Paso
2011
2012
Houston
2013
2014 Q1 2015
McAllen
San Antonio
© 2015 CBRE, Inc. |
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Figure 7: Historical Aggregated Texas Net Absorption
Net Absorption (MSF)
9
8
7
6
5
4
3
2
1
0
(1)
Q1 2007
Q1 2008
Q1 2009
Q1 2010
Q1 2011
Q1 2012
Q1 2013
Q1 2014
Q1 2015
Texas industrial was off to a strong start in Q1 2015. Aggregated Texas net absorption posted 8.8
million sq. ft. Q1 2015 marked not only a Texas-wide new first-quarter-high, but witnessed each
individual Texas market set, or near, an historical first-quarter-high for absorption since CBRE
began tracking aggregated Texas data. Instead of localized pockets of positive absorption, this
quarter demarcated the third consecutive quarter of positive net absorption for Austin, DFW, El
Paso, Houston, McAllen, and San Antonio collectively. This demonstrates strong fundamentals
across the vast state. This solid start set an optimistic outlook for 2015 with Texas on pace for
highest annual absorption total.
The largest contribution to total Texas net absorption in Q1 2015, 67.7%, was from Dallas-Ft. Worth.
Houston followed with 22.3%. San Antonio, El Paso, Austin, and McAllen added 4.2%, 3.8%, 1.8%,
and 0.2%, respectively.
© 2015 CBRE, Inc. |
4
Figure 8: Asking Rate, Gross Avg. Monthly
$/SF
0.70
0.65
0.60
0.55
0.50
0.45
0.40
0.35
0.30
2007
2008
Austin
2009
DFW
2010
El Paso
2011
Houston
2012
2013
McAllen
2014
Q1 2015
San Antonio
AUSTIN:
After several years of stagnation, asking rates
appear to be on the rise. Raises in the citywide
average have been seen in recent quarters, but
that was mostly due to increases in flex rates. It
has appeared that warehouse space has begun to
follow suit. The market wide average asking rate
finished the quarter at $0.73, a 4.3% quarterover-quarter increase.
DALLAS/FT. WORTH:
for industrial spaces by $0.05 per sq. ft. This
combined with fewer concessions reflects the
strong market fundamentals in DFW. Despite
marginally increasing vacancy rates, DFW
remains well below historical highs.
Additionally, with strong demand for space,
lease rates are anticipated to continue to rise,
especially in the strongest submarkets.
EL PASO:
The average asking industrial lease rate decreased
by $0.02 to $3.77 per sq. ft. from Q4 2014. The
decrease in average asking rate may be partially
explained by the much active Class A segment.
Strong absorption in Q1 2015 of Class A space
reallocated a larger average weight on Class B and
Class C asking rates.
HOUSTON:
Rental rates increased by 3% as of Q1 2015. The
current average monthly asking gross per sq. ft.
citywide is $0.69, up from $0.67 as of Q4 2014.
Rates have steadily increased during the prior 12
months ending Q1 2015 with a 9.5% increase since
Q4 2013. Going forward, increases are not likely to
be as strong, yet CBRE Econometric Advisors
expects 4.3% annual average rent growth through
2017 as oil price impacts are limited by submarket
exposure to the upstream segment and
downstream continues its robust expansion.
MCALLEN:
Q1 2015 recorded an increase of 1.5% in the
average annual asking industrial lease rate from
$4.00 to $4.06 per sq. ft. This is the sixth
consecutive quarter with an average asking rate
increase as average rates gets closer to the prerecession rate of $4.08 per sq. ft.
SAN ANTONIO:
Q1 2015 started off with more modest growth as
asking rates rose $0.17 per sq. ft., accounting for
28% of the increase seen in Q4 2014. All
submarkets saw increases in their average rates,
with the exception of the South. Sticking with the
trend seen throughout the market, Flex rates saw a
more modest increase of $0.29 per sq. ft. from the
end of 2014, and finished the year at $10.35 per sq.
ft. Warehouse product also saw a slower growth in
its rates, which ended the quarter at $5.37 per sq.
ft. after a $0.19 per sq. ft. rise.
© 2015 CBRE, Inc. |
5
CONSTRUCTION
.
AUSTIN:
The North submarket delivered 109,887 sq. ft.
this quarter of warehouse space at 2301
Scarborough Drive. This speculative building
marks the first industrial delivery since Q2 2014.
The Southeast submarket saw the heaviest
volume under construction with 239,205 sq. ft.
underway on Expo Center Buildings 10 and 11.
The Northeast ended the quarter at 90,331 sq. ft.
for the project at 8024 Exchange Drive. The
South submarket has 30,000 sq. ft. under
construction at Scottsdale Crossing Commerce
Park. That brings the cumulative total of
industrial product under construction in the
Austin market to 359,536 sq. ft.
DALLAS/FT. WORTH:
Q1 2015 saw deliveries bring under construction
down from17.2 million sq. ft. to 14.4 million sq.
ft. The majority of this construction is in
speculative industrial projects, but some buildto-suit projects are also underway. Considering
obsolescence of older properties and leasing
demand, DFW will likely absorb this new
space rapidly.
EL PASO:
The new supply of industrial buildings in El Paso
remained unchanged in Q1 2015 as there were
no industrial deliveries. The El Paso industrial
market has one project under construction.
Schneider Electric’s ongoing built-to-suit activity
will add 126,456 sq. ft. of new construction to El
Paso’s West submarket in 2015. With the elevated
vacancy rate, it remains unlikely that a developer
would build a speculative building. Nevertheless,
Class A options are limited and certain areas like
Santa Teresa remain overall tight. This may
ultimately trigger a build-to-suit in the near future.
HOUSTON:
Houston industrial new development will add
needed supply into a very tight market, especially
in the large markets of the Northwest, North and
Southeast. Construction remains active with 85
buildings underway, totaling 8.9 million sq. ft. in
the greater Houston industrial market. The
submarkets with the largest concentration of
development are the Northwest with 28 projects
totaling 3.4 million sq. ft., or 38% of the total, the
North with 36 projects totaling 2.3 million sq. ft.,
or 26%, and the Southeast with eight projects
totaling 1.8 million sq. ft., or 21%.
MCALLEN:
Q1 2015 saw the commencement of five new
construction projects. The total 224,000 sq. ft.
under construction are expected to be delivered
later this year at occupancy of 79%. The projects
include three new built-to-suits, one expansion to
an existing property, and a speculative
development. The largest current project is a
98,000 sq. ft. build-to-suite for Southwest Steel Coil
in a seven acre site located in Mission.
SAN ANTONIO:
New industrial product started of the year with
nearly a higher level of delivered construction than
seen in the entirety of 2014. Compared to the over
370,000 sq. ft. seen throughout the previous year,
Q1 2015 delivered 360,831 sq. ft. of new product,
with all of it comprised of warehouse space. Out of
the product that was delivered to the market this
quarter, roughly 60% of the space was preleased.
The largest delivery came with the over 200,000 sq.
ft. FedEx Distribution Center located at 9929-9943
Doerr Lane in the Northeast. The building was
100% preleased by FedEx at delivery. Other projects
that saw completion were the two Alamo Ridge
buildings in the Northwest , which added over
158,000 sq. ft.
© 2015 CBRE, Inc. |
6
ACTIVITIES AROUND TEXAS
Stitch Fix plans to open its third U.S. distribution center in southern Dallas this year to better service its
clients in Texas and the southern United States. The new hub is expected to create up to 500 jobs when it
opens in June. The styling company has an office in Austin and already employs more than 200 stylists in
the Dallas region. Stitch Fix plans to hire up to 500 more employees for its new 316,000-sq. ft. distribution
center in the next year.
BMW Group will build an $11 million distribution center at the Port of Galveston. The facility will include
more than 44,000 sq. ft. of processing space in two buildings on about 20 acres. When completed early
next year, the center is projected to begin handling about 32,500 fresh-from-the-factory vehicles annually
for distribution to 45 BMW and Mini dealerships in Texas, Oklahoma, Louisiana and Arkansas.
CST Brands, the parent company of Corner Store, is opening the company's new distribution center in far
North San Antonio. The new 365,000-sq. ft. warehouse will serve as the main distribution hub for food and
merchandise for about 600 Corner Store locations across Texas. The warehouse sits on a 77-acre campus
in San Antonio that also has about 146,000 sq. ft. of office space that will serve as the company's future
headquarters in 2016.
Market
Transaction Size
(SF)
Austin
80,476
Dallas/Ft. Forth
1,500,000
Buyer
Address
Submarket
Birtcher Real Estate Group
4111 Todd Lane
Southeast
LaSalle Investment Management
Commerce 45
South Dallas
El Paso
245,474
ViaWest Properties LLC
Merchant Ave.
Central
Houston
563,500
Industrial Property Trust
Bayport North Distribution
Southeast
McAllen
33,350
Insco Distributing, Inc.
1218 E. Laurel Ave.
McAllen
384,250
Stream Realty Partners
5711 FM 78
Northeast
San Antonio
Market
Transaction Size
(SF)
Tenant
Address
Submarket
Austin
117,000
Flextronics
9800 Metric Blvd.
North
Dallas/Ft. Forth
950,000
Uline Inc.
980 Bethel Road
DFW Airport
El Paso
100,000
Interload Forwarding
9660 Plaza Circle
Lower Valley
Houston
103,950
Atlantic Clothing
8605 City Park East
Northeast
McAllen
185,499
Confidential
2111 E. Hester Road
Off-Park
Pearson Education
6550 N. Loop 1604
Northeast
San Antonio
76,229
© 2015 CBRE, Inc. |
7
CONTACTS
Lynn Cirillo
[email protected]
Leta Wauson
Senior Research Analyst, Houston
+1 713 577 1604
[email protected]
Patrick Loewe
+1 512 499 4939
[email protected]
Lexi Zager
+1 214 979 6532
[email protected]
Pedro Nino, Jr.
Ciudad Juárez
+1 915 313 8816
[email protected]
CBRE OFFICES
Austin
Austin, TX 78701
Houston
Houston, TX 77056
Dallas
Dallas, TX 75201
San Antonio
El Paso, McAllen, Ciudad Juárez
El Paso, TX 79901
Nicholas Ianetta
+1 210 253 6019
[email protected]
Research Gateway at www.cbre.com/
researchgateway.
McAllen and San Antonio markets. To account for the varying size differences of the major markets, average
asking monthly rate calculations are weighted by its associated available square feet.
MARKETVIEW
Texas unemployment rate fell
to 4.1%, the lowest rate since
April 2008
Figure 1: Unemployment History
Unemployment Rate (%)
14
12
10
8
6
4
2
0
2000
2001
2002
Austin
2003
DFW
2004
2005
El Paso
2006
Houston
2007
2008
2009
McAllen
2010
2011
San Antonio
2012
Texas
2013
2014
U.S.
Source: Bureau of Labor Statistics, Not Seasonally Adjusted, December 2014.
AUSTIN
HOUSTON
United Weld Operations, is expected to bring at least
Manufacturer, Daikin Industries, is expanding in the
350 new jobs by December 2019 to San Marcos, 29
Houston area, adding 2,800 to its local workforce. The
miles southwest of Austin, as the result of a new
new campus will be home to about 4,000 people,
economic development incentive agreement.
including about 800 new jobs.
DFW
MCALLEN
Manufacturer, Hilti Inc. is relocating their test lab, and
Southwest Steel Coil has purchased seven acres in
repair service and distribution operation to Plano, 30
Mission, part of the McAllen–Edinburg–Mission metro,
miles northeast of Dallas/Fort Worth International
with plans to begin transforming steel coils by October
Airport, expecting to bring about 250 employees.
2015, creating at least 25-40 jobs at the facility.
EL PASO
SAN ANTONIO
Charles Schwab, CN Wire, Prudential, Schneider
Dollar General is building a 900,000-sq. ft. distribution
Electric, and ADP all have ongoing projects that will
center in San Antonio that is expected to employ 530
ultimately create more than 2,000 jobs in the region.
people. The center will serve more than 1,000 stores in
Texas and the surrounding region.
© 2015 CBRE, Inc. |
1
The U.S. Bureau of Labor Statistics reported that
unemployment rates were lower in December than
a year earlier in 341 of the 372 metropolitan areas,
higher in 25 areas, and unchanged in 6 areas. 312
metropolitan areas had over-the-year increases in
nonfarm payroll employment, 49 had decreases,
and 11 had no change.
gain in employment occurred in Midland (6.0%),
followed by Longview (5.2%).
Over the year, nonfarm employment rose in all of
the 38 metropolitan areas with annual average
employment levels above 750,000 in 2013. The
largest over-the-year percentage increase in
employment in these large metropolitan areas
occurred in Dallas-Fort Worth-Arlington (4.4%),
and Houston-Sugar Land-Baytown (4.2%).
In Texas, the largest over-the-year employment
increases occurred in Dallas-Fort Worth-Arlington
(+136,900), and Houston-Sugar Land-Baytown
(+120,600). The largest over-the-year percentage
Figure 2: Employment, Texas Metropolitan Statistical Areas
(000’s)
1,400
1,200
1,000
800
600
400
200
0
Mining, Logging, Manufacturing Transportation,
Construction
Warehousing,
Utilities
Information
Austin-Round Rock-San Marcos
Houston-Sugar Land-Baytown
Financial
Activities
Professional,
Education,
Business Services Health Services
Leisure,
Hospitality
Other Services
Government
El Paso
Source: Bureau of Labor Statistics, Not Seasonally Adjusted Annual Rate, December 2014.
Figure 3: Metropolitan Statistical Areas Employment breakdown (000’s)
Industry
Austin-Round Rock- Dallas-Fort WorthSan Marcos
Arlington
Houston-Sugar
Land-Baytown
El Paso
McAllen-EdinburgMission
Texas
Mining, Logging, Construction
47.6
195.2
12.8
322.4
9.6
52.8
985.4
Manufacturing
53.8
256.4
17.2
263.8
6.4
46.3
891.8
Trade, Transportation, Utilities
15.9
167.9
14.8
143.3
8.6
25.2
520.9
Information
24.4
79.7
5.8
33.7
2.1
21.5
211.1
49.8
261.5
12.5
147.6
9.0
79.4
721.1
Professional, Business Services
147.2
533.8
31.0
448.4
15.5
118.5
1,562.3
Education, Health Services
103.2
402.3
41.3
363.2
65.6
143.8
1,574.1
Leisure, Hospitality
106.4
329.5
31.2
286.7
22.1
118.7
1,188.0
39.2
114.0
9.8
101.8
6.1
34.8
403.2
Government
171.6
Total Non Farm
910.4
412.9
3279.4
70.4
297.2
389.6
2960.7
57.0
246.3
164.1
947.0
1,862.6
11,847.5
Other Services
Source: Bureau of Labor Statistics, Not Seasonally Adjusted Annual Rate, December 2014.
© 2015 CBRE, Inc. |
2
VACANCY AND ABSORPTION
AUSTIN: After the first quarter of positive net
absorption this year in Q3 2014, the Austin
industrial market continued the course and ended
Q4 2014 with 325,620 sq. ft. of positive net
absorption. This pushed vacancy down 70 basis
points (bps) quarter-over-quarter to 10.6%
However, this is a 80 bps year-over-year increase.
DALLAS/FT. WORTH: Driven down by 17
consecutive quarters of positive net absorption,
vacancy rates remain at historically low figures.
This quarter, however, saw vacancy rates rise.
Direct vacancy increased to 6.8% and total
vacancy sits one basis point higher at 6.9%.
Despite continued positive absorption, the
vacancy rate rose as a direct result of some
vacant completions.
EL PASO: The reported 291,860 sq. ft. of net
absorption in Q4 2014 was a result of 661,155 sq.
ft. of gross absorption and 369,295 sq. ft. of newly
vacated space. The positive activity outperformed
the previous two years and decreased the overall
market vacancy rate to a seven-year-low of 13.0 %.
HOUSTON: During the fourth quarter of 2014, 2.2
million sq. ft. of the Houston area’s industrial
inventory was absorbed; over 1.7 million sq. ft. of
new product was delivered and Houston’s average
industrial vacancy rate dropped 30 bps from 5.3%
as of Q3 2014 to 5.0%, year-to-date 2014.
MCALLEN: The Q4 2014 market vacancy rate of
11.3% is down 10 bps quarter-over-quarter and 90
bps year-over-year with year-to-date net absorption
in 2014 outperforming the previous two years.
SAN ANTONIO: Even though Q4 2014 saw positive
net absorption, vacancy rose 80 bps quarter-overquarter to 7.7%, marking the sixth straight quarter
that it was below 10%. This was driven by almost
200,000 sq. ft. of new product that was not
preleased prior to delivery.
Vacancy (%)
22
20
18
16
14
12
10
8
6
4
2007
2008
Austin
Houston
2009
2010
2012
2013 2014
El Paso
San Antonio
Availability (%)
24
22
20
18
16
14
12
10
8
6
4
2007
2008
2009
2010
Austin
Houston
2011
2012
DFW
McAllen
2013
2014
El Paso
San Antonio
$/SF
19,000
16,000
13,000
10,000
7,000
4,000
1,000
-2,000
2007
Austin
2008
2009
DFW
El Paso
2011
DFW
McAllen
2010
2011
Houston
2012
McAllen
2013
2014
San Antonio
© 2015 CBRE, Inc. |
3
Figure 7: Annual Occupancy Growth and Net Absorption
Annual Net Absorption (MSF)
Annual Occupancy Growth (%)
30
5
4
20
3
2
10
1
0
0
(1)
(2)
(10)
(3)
(4)
(20)
(5)
(6)
(30)
2008
Austin
2009
DFW
2010
El Paso
2011
Houston
2012
McAllen
San Antonio
2013
2014
TEXAS Annual Net Absorption
The end of 2014 ushered in another year of positive annual occupancy growth for the cumulative
Texas Industrial Markets. While the Texas cumulative growth was less than previous years, this was
due to four trailing years of strong growth. For perspective, during the same five year period back to
2010, Texas posted 106 million sq. ft. of positive net absorption with 29 million sq. ft. in 2014 alone.
This indicates that demand for industrial space has increased since its 2009 cycle low.
During the last economic cycle, both Austin and San Antonio saw the largest rates of decline in
occupied space during the recession. Trending similarly, the two markets have since experienced
the two largest occupancy growth rates during the recovery. Houston proved to be the most stable
industrial market, recording the smallest fluctuations in occupancy. Similar to Houston, El Paso was
fairly stable in occupancy during most of the cycle with a strong increase in its rate of growth for
2014. The seventh largest industrial market in Texas, McAllen saw positive occupancy growth for
four of the last five years. Due to its relatively small market size, changes in activity have a more
significant impact than in larger markets. Dallas/Ft. Worth led the occupancy growth in primary
markets. Despite its large size, Dallas/Ft. Worth experienced positive growth of 2.3% in 2013
alone. While occupancy growth slipped modestly in 2014, the DFW market still yielded positive net
absorption for the year. Dallas/Ft. Worth continues to positively anchor net absorption in Texas.
Since 2010, Dallas/Ft. Worth has accounted for 57% of total Texas net absorption. In 2014, however,
Houston accounted for the largest share (48%) of annual net absorption in Texas for the first time
since 2010. Dallas/Ft. Worth was not far behind at 44%, with all secondary markets also posting
positive contributions.
© 2015 CBRE, Inc. |
4
Figure 8: Asking Rate, Gross Avg. Monthly
$/SF
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2007
Austin
2008
2009
DFW
2010
El Paso
2011
Houston
2012
McAllen
2013
2014
San Antonio
AUSTIN:
Citywide average asking rates remained flat
this quarter coming in again at $0.70 per sq. ft.
per month. Citywide warehouse space
followed this trend and registered in again at
$0.52 per sq. ft. for the second consecutive
quarter. Citywide flex space dropped $0.02 per
sq. ft. from the previous quarter ending this
quarter at $0.90. Despite this drop in flex
rates, there was upward pressure in the
Southwest and Northwest submarkets which
saw an increase in asking rates.
DALLAS/FT. WORTH:
This quarter average asking lease rates
increased for industrial spaces by $0.02 per sq.
ft. This combined with fewer concessions
reflects the strong market fundamentals in
DFW. With relative historical tightened
conditions today and strong demand for
space, lease rates are anticipated to continue
to rise, especially in the strongest submarkets.
EL PASO:
The average asking industrial lease rate
appreciated by $0.05 to $3.78 per sq. ft. from Q3
2014 and $0.16 above the rate from the same
time last year. The reported overall average
asking lease rate for 2014 experienced the largest
year-over-year growth of 4.4% since CBRE
Research began tracking asking rates in 2007.
HOUSTON:
Rental rates remained flat as of the end of 2014
after steadily increasing during the prior 12 months
ending Q3 2014. The current average monthly
asking gross per sq. ft. citywide is $0.67. This
follows the 24% increase from Q3 2013 to Q3 2014
at $0.54.
MCALLEN:
Q4 2014 recorded an increase of $0.08 per sq. ft. in
the average annual asking industrial lease rate from
$3.92 to $4.00 per sq. ft. This is the fifth consecutive
quarter with an average asking rate increase as
market conditions continue to steadily improve
from 2013. The average asking lease rate closed
2014 $0.23, or 6.1%, above the 2013 figure and
closer to the pre-recession rate of $4.08 per sq. ft.
SAN ANTONIO:
Citywide average asking rates rose another $0.60
per sq. ft. a 150% increase compared to the rise in
rates experienced the previous quarter. With the
exception of the South, all other submarkets saw
increases in their average rates. The Northwest
remained the highest, which finished the year at
$9.66 per sq. ft., a $0.94 per sq. ft. increase. Flex
rates saw an $0.80 per sq. ft. increase from Q3 2014,
and finished the year at $10.06 per sq. ft., the first
time reaching this level since 2010. Warehouse
product also saw an increase in rates, rising $0.22
per sq. ft. up to $5.18 per sq. ft.
© 2015 CBRE, Inc. |
5
CONSTRUCTION
.
AUSTIN:
Construction remained unchanged in Q4 2014
with 469,423 sq. ft. in the pipeline. 239,205 sq.
ft. of that total was in the Southeast submarket,
which made up over half of the construction in
progress. For the year, developers have
delivered 578,109 sq. ft. of new industrial space
to the Austin market.
DALLAS/FT. WORTH:
a 20% increase from last quarter’s 5.0 million
sq. ft. This marks the most completion square
footage in DFW since Q4 2001. Notable
deliveries included two speculative buildings
totaling a million sq. ft. apiece; one completed
in South Dallas and the other in Northwest
Dallas. This quarter saw under construction dip
back down to 17.2 million sq. ft. compared to
last quarter’s market high total of 19.5 million
sq. ft. With roughly 11 million sq. ft. of users in
the market, the current pre-leasing figure of
33% will likely rise in 2015. With supply
extremely limited across all size ranges coupled
with growing demand, the completion of these
projects will deliver much needed new space to
the market.
EL PASO:
The El Paso industrial market has one project
under construction. Schneider Electric’s ongoing
built-to-suit activity will add 126,456 sq. ft. of new
construction to El Paso’s west submarket in 2015.
remained unchanged in the Q4 2014 as there were
no industrial deliveries.
HOUSTON:
Construction remains active with 85 buildings
underway, totaling 8.4 million sq. ft. in the greater
Houston industrial market. During Q4 2014, 25
buildings, totaling 1.7 million sq. ft. were
completed compared to 53 buildings totaling 3.9
million sq. ft. at the end of the Q3 2014. During
2014 12 million sq. ft. of industrial product has
been delivered. This amount of industrial product
has not been delivered in Houston since 2008 at
12.3 million sq. ft.
MCALLEN:
increased in Q4 2014 through the delivery of two
cold storage warehouses in Pharr at approximately
20,000 each. At the close of Q4 2014, there was no
industrial space under construction. However, two
significant projects have been announced for
2015. In Mission, Southwest Steel Coil announced
plans to build a 100,000 sq. ft. Class A facility and
in Pharr, Pharr Bridge Business Park development
was also announced and began marketing
availability.
SAN ANTONIO:
The market also saw the delivery of three
buildings to the market, which added over 370,000
sq. ft. of product to the market. All delivered
product was focused solely in the Northeast
submarket, and over 80% of all square footage
delivered was warehouse space. Enterprise 1, a
315,000 sq. ft. warehouse building delivered with
over 180,000 sq. ft. preleased by Keystone (127,000
sq. ft.) and Goodman (52,000 sq. ft.). The TriCounty Business Park added Buildings 3 and 4,
with almost half of Building 3 (16,00 sq. ft.)
preleased to Verizon.
© 2015 CBRE, Inc. |
6
.
Texas generated 457,900 jobs in 2014, putting it back in the No. 1 spot after trailing California the
two previous years, according to data released by the U.S. Bureau of Labor Statistics (BLS). The Texas
job growth rate of 4% was double the national average in 2014. With lower oil prices, job growth
may be slower going into 2015, although Texas’ oil and gas industry accounts for only about 3% total
employment, but it is still a larger share than in many other states, according to the BLS. Some
companies may temporarily adjust operations because of the softer energy market, but there are still
significant sale and lease transactions taking place in the Texas market.
Market
Transaction Size
(SF)
AUSTIN
246,390
DALLAS/FT. FORTH
2,034,164
Buyer
Address
Submarket
PS Business Parks, Inc.
12317 Technology
Northwest
James Campbell Co.
DFW Industrial Portfolio
DFW Wide
EL PASO
100,000
El Paso 911
6055 Threadgill Ave.
Northeast
HOUSTON
312,000
TS Cedar Port Partners
Cedar Crossing Industrial
Southeast
MCALLEN
30,600
Confidential
6601 S. 33rd Street
McAllen
SAN ANTONIO
58,000
Cole Office & Industrial
19031 Ridgewood Pky
Far North Central
Market
Transaction Size
(SF)
AUSTIN
Tenant
Address
Submarket
87,754
Allergan
301 W. Howard Lane
East
DALLAS/FT. FORTH
670,000
Ulta Inc.
Mountain Creek & I-20
South Dallas
EL PASO
100,000
Interload Forwarding
9660 Plaza Circle
Lower Valley
HOUSTON
103,950
Atlantic Clothing
8605 City Park East
Northeast
MCALLEN
30,600
The Fresh Group
5000 George McVay Dr.
McAllen
SAN ANTONIO
49,000
United Postal Service
4980 Eisenhauer Road
Northeast
© 2015 CBRE, Inc. |
7
CONTACTS
Lynn Cirillo
[email protected]
Leta Wauson
Senior Research Analyst, Houston
+1 713 577 1604
[email protected]
Patrick Loewe
+1 512 499 4939
[email protected]
Lexi Zager
+1 214 979 6532
[email protected]
Pedro Nino, Jr.
Research Coordinator, El Paso,
McAllen, Ciudad Juárez
+1 915 313 8816
[email protected]
CBRE OFFICES
Austin
Austin, TX 78701
Houston
Houston, TX 77056
Dallas
Dallas, TX 75201
San Antonio
El Paso, McAllen
El Paso, TX 79901
Nicholas Ianetta
+1 210 253 6019
[email protected]
Research Gateway at
Texas Industrial
MarketView 2Q 2014
Q2 2014
CBRE Global Research and Consulting
AUSTIN-ROUND ROCKSAN MARCOS
DALLAS-FORTH
WORTH-ARLINGTON
EL PASO
5.2%
4.3%
HOUSTON-SUGAR
LAND-BAYTOWN
7.2%
MCALLEN-EDINBURGMISSION
SAN ANTONIONEW BRAUNFELS
9.3%
5.1%
4.9%
TEXAS
U.S.
5.1%
6.3%
Unemployment Statistics Y-o-Y
TEXAS ADDS 383,100 JOBS IN PAST 12 MONTHS AND OVER-THE-YEAR JOB
GROWTH IS LARGEST IN NEARLY 17 YEARS.
Figure 1: Quick Stats (as compared to Q1 2014)
Austin
Dallas Ft.
Worth
El Paso
Houston
McAllen
San Antonio
Vacancy
Asking Rates
Net Absorption
Under Construction
Delivered Construction
#
#
#
$
$

1
$
#
$


#

1
1
#
#

#
#
#
#
$
#
$
#
$
#
1
Hot Topics
• Industrial product in Austin saw the highest level of
year-to-date negative net absorption since 2009. Yet,
citywide average rates saw their largest increase since
2011. Year-to-date deliveries totaled over 570,000
sq. ft.
• For the 15th straight quarter, the DFW Metroplex has
posted a positive net absorption. Q2 2014 absorption
witnessed a solid 2.4 million sq. ft. While lower than
4.4 million sq. ft. in Q1 2014, it emphasizes precisely
how tight the market has become.
• The industrial real estate market in El Paso reports
strong activity in Q2 2014. Total transactions recorded
624,202 sq. ft. of gross absorption. This quarter
was absent of recent large-scale vacancies that have
concealed the health of the primary segment of the
local market. As result, the local market produced
341,574 sq. ft. of positive net absorption to set a new
13-quarter-high dating back to Q1 2011.
• Houston’s thriving energy economy has fueled an
active real estate market over the past few years, and
is continuing into the second half of 2014. Industrial
net absorption is up from 1.6 million sq. ft. in Q1
2014 to 1.7 million sq. ft. in Q2 2014 and deliveries
are up considerably from 2.4 million sq. ft. in Q1
2014 to 3.9 million sq. ft. in Q2 2014. Completions
continue to surpass net absorption with the overall
vacancy rate steady at 5.4% during 2014.
• The Brownsville Herald reported that tens of millions
of dollars in capital investment may ultimately pour
into the Rio Grande Valley thanks to the creation of
an EB-5 “regional center” by Civitas Capital Group, a
Dallas-based asset-management firm that links foreign
investors to particular development projects around
the state. Civitas has said that the primary goal is
job creation by establishing the “Rio Grande Valley
Regional Center."
• Despite a lack of available space, the San Antonio
industrial market had another quarter of positive
activity. Net absorption for Q2 2014 was positive
205,961 sq. ft., shrinking vacancy down to 6.6%.
Construction picked up with 468,199 sq. ft. of new
development currently in the works, with some tenants
already in place to take occupancy upon completion
all kinds continue to show strong interest in the Alamo
City.
14%
12%
10%
8%
6%
4%
2%
2000
2001
Austin
2002
2003
DFW
2004
El Paso
2005
2006
Houston
2007
2008
McAllen
2009
2010
San Antonio
2011
2012
Texas
2013
May 2014
U.S.
Source: Bureau of Labor Statistics, July 2014.
Energy Update
Texas Non-energy Exports
Texas crude oil production in April 2014 exceeded
3.0 million barrels per day for the first time since
the late 1970s, more than doubling production in
the past three years, according to data from the
U.S. Energy Information Administration (EIA). The
continued increase in Texas crude oil production
can be credited in part to the Eagle Ford Shale
and Permian Basin. The EIA reported, "Gains in
Texas crude oil production come primarily from
counties that contain unconventional tight oil and
shale reservoirs in the Eagle Ford Shale in the
Western Gulf Basin, where drilling has increasingly
targeted oil-rich areas, and multiple reservoirs
within the Permian Basin in West Texas that have
seen a significant increase in horizontal, oil-directed
drilling."
Texas total exports ranked first among U.S. states,
exceeding $279.7 billion in 2013, an increase of
5.7% from 2012. Export prices for most of the top
non-energy industries in Texas such as computer
and electronic products, nonelectrical machinery,
and transportation equipment all advanced between
February and May, while prices for export chemicals
decreased.
Four of the top five counties for oil production
in Texas were located in the Eagle Ford Shale in
April, according to data from the Texas Railroad
Commission. Karnes County outside San Antonio
took front rank for crude oil with 5.4 million barrels
of crude oil in the month. The top natural gas
producer was Tarrant County near Fort Worth
which produced 58.1 billion cubic feet of natural
gas. There were 61.3 million barrels reported for
statewide oil production, down a little in contrast to
March's 62.4 million, however, a 4% increase over
April 2013 production that capped at 58.9 million
barrels.
The Texas Pipeline Association (TPA) commissioned
a Texas Tech University study reporting that as
development continues to grow in the Eagle Ford
Shale and in West Texas’ Permian Basin, the need
for additional midstream infrastructure has also
grown. Texas’ oil and gas pipeline industry is said
to have provided $33-billion in overall economic
impact, and assisted more than 165,000 jobs in
2013. The study states that within the same time
period, the industry supplied $18.7-billion in gross
state revenue, and introduced $1.6-billion in state
and local revenue taxes.
Computer and electronic product manufacturing
was Texas’s largest non-energy export in 2013
($48.2 billion), accounting for approximately 20%
of the state’s export dollars. Texas ranked first in the
United States in exported computer and electronic
products ($48.2 billion) and nonelectrical machinery
exports ($29.9 billion). Texas’s top six non-energy
export industries in 2013 accounted for 61% ($170.6
billion) of the state’s total export dollars.
Export prices for computer and electronic products
increased 0.2% for the 3-month period ended in
May, as prices marked up 0.1% in March and May.
Over the past 12 months, the export price index for
computers and electronic products declined 0.7%,
compared to a 0.4% rise for all export manufactured
products. A 0.9% drop between July and October
2013 drove the annual decrease over the past year.
Export prices for chemicals fell 0.5% for the 3
months ended in May, as monthly decreases were
recorded in April and May. Export chemical prices
steadily decreased over the 12-month period ended
in May, declining 3.2%. The biggest drop happened
between September 2013 and May 2014 when
the index fell 2.2%. Declining petroleum feedstock
prices were the largest contributor to the recent
decrease in chemical prices.
© 2014, CBRE, Inc.
TEXAS INDUSTRIAL SECOND QUARTER
MARKETVIEW
Figure 3: Industry Employment breakdown by Market
Texas Industrial | MarketView
000's
Q2 2014
COMPARATIVE EMPLOYMENT
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Government
Education &
Health
Texas
Professional &
Business
Retail Trade
Austin-Round Rock-San Marcos
Leisure &
Hospitality
Manufacturing
Financial
Activities
El Paso
Construction
Wholesale
Trade
Houston-Sugar Land-Baytown
Transportation
& Utilities
Natural
Resources &
Mining
Information
EMPLOYERS FROM ALL 11 MAJOR INDUSTRIES IN TEXAS EXPANDED THEIR PAYROLLS IN MAY.
The Texas economy continued to improve in May, expanding by 56,400
seasonally adjusted nonfarm jobs. A total of 383,100 jobs were added in the past
12 months, making it the largest year-over-year job increase in Texas in nearly 17
years. Additionally, the state’s annual growth rate climbed to 3.4% in May, which
is the highest it has been since November 2012. Texas consistently ranks among
the top states for annual job growth. Texas’ seasonally adjusted unemployment
rate dropped to 5.1% in May, down from 5.2% in April.
Trade, Transportation, and Utilities experienced another strong month of growth
in May with the addition of 11,800 jobs. Wholesale Trade accounted for 7,700
jobs added, while Retail Trade expanded by 2,500 positions and Transportation,
Warehousing, and Utilities grew by 1,600 jobs. Since the start of 2010, Trade,
Transportation, and Utilities has experienced only one month of job losses. Annual
growth continued to gain momentum in May as the industry added 86,300
positions over the year for a 3.9%.
Construction employment increased by an estimated 3,700 jobs in May, which
followed a revised gain of 6,300 positions in April. The Construction industry
has added 11,900 jobs so far in 2014, marking its strongest start to a year
since 2007. The annual growth rate ticked up to 4.3% in May, representing the
addition of 26,500 jobs over the year. This marked the Construction industry’s
highest annual growth rate since September 2013.
Following a revised gain of 5,800 positions in April, Mining and Logging
posted another month of growth with the addition of 3,000 jobs in May. The
industry has added 13,400 jobs so far in 2014, marking its strongest start to
a year in series history. Annual growth increased for the third straight month
as the industry added 21,400 positions over the year. The annual growth rate
for Mining and Logging reached 7.4% in May, the highest growth rate for the
industry since April 2013.
Figure 4: Industry Employment breakdown (000's)
INDUSTRY
2
Professional & Business
Government
Educational & Health
Leisure & Hospitality
Retail Trade
Manufacturing
Construction
Wholesale Trade
Transportation & Utilities
Information
Natural Resources & Mining
Total Nonfarm Employment
AustinRound RockSan Marcos
143.62
170.38
101.25
104.42
97.33
53.25
49.24
42.61
46.63
15.06
23.88
3.83
890.7
511.68
397.73
390.45
332.15
327.43
258.05
252.56
154.36
180.57
153.22
80.97
27.41
3,187.7
El Paso
29.9
68.9
40.0
30.9
38.3
17.3
12.1
12.8
10.3
14.0
5.7
0.2
290.0
HoustonSugar LandBaytown
440.2
377.7
347.4
281.7
289.4
258.5
144.9
196.5
156.7
136.0
33.1
112.6
2,877.2
15.2
55.3
61.3
22.0
35.1
6.3
9.0
7.1
7.3
8.2
2.1
2.1
237.9
San AntonioNew
Braunfels
114.2
160.8
141.5
121.2
103.9
46.3
76.8
43.8
32.7
23.6
21.1
6.3
926.9
Texas
1,515.5
1,837.9
1,528.1
1,188.3
1,248.4
883.4
699.3
636.6
584.0
488.6
208.0
311.1
11,531.8
© 2014, CBRE, Inc.
MARKETVIEW
Q2 2014 saw the largest increase since 2009. The $0.04 per sq. ft. bump
brought asking rates up to $0.67 per sq. ft. per month, the highest levels
recorded by CBRE Research. Flex rates saw a significant increase as well, ending
the quarter at $0.87 per sq. ft., which is also a record high for average asking
rates. Warehouse rates saw a return to what they were two quarters prior, falling
back $0.01 to $0.52 per sq. ft.
$0.70
$0.65
$0.60
$0.55
DALLAS/FT. WORTH
$0.50
This quarter saw the average asking lease rate for industrial space increase
by $0.04 per sq. ft. With tightened conditions today and strong demand for
space, lease rates are anticipated to continue to rise, especially in the strongest
submarkets.
$0.45
$0.40
$0.35
2007
2008
Austin
2009
DFW
2010
El Paso
2011
Houston
2012
McAllen
2013
Q2 2014
San Antonio
EL PASO
Average asking rates per sq. ft. are on a positive slope yet again, after having
leveled off since 2012 as high vacancy puts downward pressures on rates.
This quarter recorded an increase of $0.09 per sq. ft. in the average asking
industrial lease rate, to $3.73 per sq. ft. The Q2 2014 asking rate represents
the third consecutive quarter of growth and is also the largest gain over the
past three quarters. Class B product saw the largest increase, at $0.15 per sq.
ft., increasing the Class B average to asking lease rate to $3.79 per sq. ft. with
this space becoming more active in recent quarters. Class A product saw an
increase of $0.07 per sq. ft., to $4.11 per sq. ft.
HOUSTON
22%
18%
Citywide average quoted gross monthly rate for all product types increased from
$0.63 per sq. ft. in Q1 2014 to $0.66 in Q2 2014. By property type, rates are
as follows: $0.46 per sq. ft. for warehouse/ distribution space; $0.80 per sq. ft.
for flex/service space; and $0.73 per sq. ft. for manufacturing space.
16%
SAN ANTONIO
14%
NNN asking rates for available industrial space jumped to $6.33 per sq. ft. in
Q2 2014, a $0.34 increase from asking rates in Q1 2014. This is the first time
city-wide asking rates have risen above the $6.00 range since 2011.
20%
12%
10%
VACANCY
8%
6%
4%
AUSTIN
Per Sq. Ft.
Q2 2014
ASKING RATES
Figure 5: Gross Monthly Asking Rates
AUSTIN
2007
Austin
2008
DFW
2009
2010
El Paso
2011
Houston
2012
McAllen
2013
Q2 2014
San Antonio
For the second consecutive quarter, the Austin industrial market saw negative
net absorption, the first time the year has started with the first two quarters
posting negative absorption since 2009. Posting a negative net absorption of
109,469 sq. ft., this brings the year-to-date net absorption to negative 293,813
sq. ft. Thus, citywide vacancy continued to rise, increasing 40 basis points (bps)
quarter-over-quarter to 11.6%.
DALLAS/FT. WORTH
The Dallas/Fort Worth Industrial market witnessed a further downtick in vacancy
during Q2 2014. Both the direct and total vacancy rates decreased, to 6.2%
and 6.3% respectively, compared to Q1 2014 figures of 6.3% and 6.4%.
This continued improvement in vacancy rates highlight DFW’s strong market
fundamentals.
24%
EL PASO
The reported 341,574 sq. ft. of net absorption in Q2 2014 was a result of
624,202 sq. ft. of gross absorption and 282,628 sq. ft. of newly vacated space.
This ultimately decreased the overall market vacancy rate by 80 bps, to 13.7 %,
from 14.5% in the previous quarter.
20%
16%
HOUSTON
12%
The overall vacancy rate has remained steady at 5.4% in Q2 2014. Deliveries
are up considerably from 2.4 million sq. ft. in Q1 2014 to 3.9 million sq. ft. in
Q2 2014 continuing to surpass net absorption which is up from 1.6 million sq. ft.
in Q1 2014 to 1.7 million sq. ft. in Q2 2014.
8%
4%
2007
Austin
2008
DFW
© 2014, CBRE, Inc.
2009
El Paso
2010
2011
Houston
2012
McAllen
2013
Q2 2014
San Antonio
SAN ANTONIO
Vacancy was down by 110 bps to 6.6%. While the market continues to lack
available space, deal activity has remained fairly steady. Over the quarter,
numerous construction projects broke ground on much needed industrial
speculative space, and a new rail park opened for business spurring additional
activity.
3
MARKETVIEW
000's
Q2 2014
Figure 8: Construction, Delivered Sq. Ft.
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2007
2008
Austin
2009
DFW
2010
El Paso
2011
Houston
2012
2013
McAllen
San Antonio
Q2 2014
CONSTRUCTION
AUSTIN
DALLAS/FT. WORTH
The 130 Pecan building was completed this quarter, adding 120,000 sq. ft.
to the Far Northeast submarket. This completion coincides with the ground
breaking of Tuscany 9, a 90,000 sq. ft. building that is expected to be
delivered in Q2 2015. With construction levels still remaining at low levels,
Tuscany 9 is a welcome addition to the growth of the market. It should be
noted that at least two new projects are planned to break ground within the
next six months. Parmer 3.2 is set to kick off early next month, with Parmer
3.1 ready to follow six months after that. These are set to bring roughly
300,000 sq. ft. of flex product under construction.
The construction pipeline reached 18.5 million sq. ft. in Q2 2014. The
majority of this construction is in speculative industrial projects, but
some build-to-suit projects are also underway. Although an impressive
construction total, this remains conservative compared to historical DFW
construction and vacancy. Considering obsolescence of older properties
and the limited supply of available space, DFW will likely absorb this new
space rapidly.
EL PASO
City and county leaders announced that Schneider Electric plans to hire
nearly 200 people to expand its operations in El Paso, investing about $7
million for a new plant adjacent to its existing West Side location. Schneider
Electric will build a $2-million, 125,000-sq.-ft. facility at 1601 Northwestern
Drive. It will spend another $5 million for machinery and equipment. The
expansion will allow for the creation of 193 full-time permanent jobs in
general manufacturing, such as wiring and some skilled trades such as
engineering.
SAN ANTONIO
Construction picked up in Q2 2014 with two new projects breaking ground.
East Group Properties began development on the first two buildings at a
new industrial park which will be known as Alamo Ridge Business Center.
The two speculative buildings will be 61,744 sq. ft. and 96,324 sq. ft. in
the Northwest submarket. Once complete, Alamo Ridge will bring roughly
400,000 sq. ft. of new product to the market.
HOUSTON
Houston’s industrial market remains among the strongest in the U.S.
primarily due to the expansion in the oil and gas industry. During the second
quarter, 1.7 million sq. ft. of Houston’s industrial inventory was absorbed.
Industrial leasing activity, which includes renewals, reached 6.9 million sq.
ft. year-to-date, compared to 6.7 million sq. ft. year-to-date 2013. During
Q2 2014, an additional 3.9 million sq. ft. delivered in 64 buildings and
there is 7.8 million sq. ft. under construction in 96 buildings.
BOOMING CONSTRUCTION IN DALLAS AND HOUSTON
At the end of the second quarter, the Dallas/Fort Worth area leads all major
Texas markets with 18.5 million sq. ft. of industrial space under construction;
construction activity in this area has not been this strong since the late
1990s.
3.9 million sq. ft. of industrial product was delivered to market in Houston
as of Q2 2014, a nearly tenfold increase from Houston’s Q2 2013 low of
411,693 sq. ft. of delivered product. The nearly 4 million sq. ft. of completed
construction this quarter comprises close to 65% of the total completed in
the major Texas metropolitan areas.
4
© 2014, CBRE, Inc.
MARKETVIEW
SQ. FT.
Austin
70,000
BUYER
ADDRESS
SUBMARKET
CyrusOne
7301 Metropolis Drive
Southeast
Dallas/Ft. Worth
844,377
Marswick Inc.
3000 Redbud Boulevard
Northeast Dallas
El Paso
123,000
AFC Logistics Corp.
7158 Merchant
Central
Houston
1,219,896
Centerpoint Properties
Excel Cedar Crossing
Southeast
McAllen
337,000
Lineage Logistics
4000 Military Highway
McAllen
San Antonio
165,007
Clarion Partners
5800 Farinon Drive
Northwest
MARKET
SQ. FT.
Austin
224,979
TENANT
ADDRESS
SUBMARKET
PPD
7554 Metro Center Drive
Southeast
Dallas/Ft. Worth 1,600,000
Georgia Pacific
Commerce 45
South Dallas
El Paso
264,432
Logistics Company
7800 Trade Center
West
Houston
243,360
Gulf Winds
Bayport Industrial Park
Southeast
McAllen
55,000
GSA-Dept. of Homeland
3700 W. Ursula
Security
McAllen
San Antonio
127,773
Keystone Automotive
Northeast
Enterprise Industrial Park
Houston
Lennox International will anchor Phase 1 of DCT Industrial
Trust's Northwest Crossroads Logistics Center after
preleasing 190,000 sq. ft. at the northwest Houston
development. Currently under construction, Phase 1 is
a 362,000-sq.-ft., single-story industrial development
in Houston's Highway 290/Tomball Parkway industrial
submarket. Lennox International will take occupancy
once construction wraps up in late 2014 or early
2015. Construction on Phase 2 of DCT's two-building,
682,000-sq.-ft. project is expected to get underway in the
second half of 2014.
Figure 11: Net Absorption, Sq. Ft.
000's
Dallas/Fort Worth
Keystone Automotive Operations leased 231,754 sq. ft.
in Lakeside 1 at 351 Lakeside Parkway in Flower Mound.
Lakeside 1 is a single-tenant industrial building that
was constructed in May 2014 in the Lewisville industrial
submarket of Dallas/Fort Worth. Keystone Automotive
will occupy the entire building. The company now has 25
locations across the U.S.
El Paso
IndCor Properties, a large Chicago industrial real estate
company purchased seven large industrial buildings in Far
East El Paso with 1.1-million-sq. ft. of space. The portfolio
includes warehouse and distribution facilities leased by
Handgards Inc., Electrical Components Int’l, and ProTrans
Int’l. The acquired buildings are 83% occupied with one
building vacant.
20,000
18,000
16,000
14,000
McAllen
Lineage Logistics, a warehousing and Logistics Company
completed the acquisition of Loop Cold Storage (“Loop”),
Oneida Cold Storage and Millard Refrigerated Services.
Based in McAllen, Loop has the largest cold storage
operation on the U.S.-Mexico border. Lineage Logistics
is one of the largest temperature-controlled warehousing
and logistics companies in the world.
12,000
10,000
8,000
6,000
4,000
2,000
0
(2,000)
Austin/Round Rock
Stoltz Companies purchased a three-building portfolio
in Crystal Park Industrial campus totaling 275,499 sq.
ft. The distribution and manufacturing space is located
at 110, 116, and 120 East Old Settlers Boulevard, off
Interstate 35 in the North Austin area. The properties
are fully leased to three tenants: Thermo Fisher Scientific,
Total Site Solutions and Toshiba. Stoltz owns and
manages properties consisting of approximately 10 million
sq. ft. of industrial, retail and land throughout the U.S.
MARKET
SIGNIFICANT SALE AND LEASE
TRANSACTIONS
Q2 2014
2007
© 2014, CBRE, Inc.
2008
Austin
2009
DFW
2010
El Paso
2011
2012
2013
Houston
McAllen
San Antonio
2014
San Antonio
A group of individuals that owned the five industrial
buildings, totaling 49,000 sq. ft., and four lots located at
1207-1229 Triplett St. and 1214 -1228 Safari St. in San
Antonio sold to a private investor. Included in the sale
were four fenced lots, two in the front and two in the rear
of the strip. The industrial complex was 80% occupied at
the time of sale.
5
CONTACTS
Q2 2014
For more information about this
Texas Industrial MarketView,
please contact:
TEXAS RESEARCH
Lynn Cirillo
CBRE Americas Research
e: [email protected]
Leta Wauson
Senior Research Analyst
CBRE Houston Research
Houston, TX 77056
t: 713 577 1604
Nick Ianetta
Research Coordinator
CBRE Austin Research
t: 512 499 4939
Lexi Zager
Researcher
CBRE Dallas Research
t: 214 979 6532
Pedro Niño, Jr.
Researcher Coordinator
t: 915 313 8816
FOLLOW CBRE
Veronica Gonzales
CBRE San Antonio Research
t: 210 253 6019
GLOBAL RESEARCH AND CONSULTING
This report was prepared by the CBRE U.S. Research Team which forms part of CBRE Global Research and Consulting – a
network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric
forecasting and consulting solutions to real estate investors and occupiers around the globe.
Additional U.S. research produced by Global Research and Consulting can be found at www.cbre.us/research.
6
DISCLAIMER
Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we
have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and
completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be
reproduced without prior written permission of CBRE.
© 2014, CBRE, Inc.
Texas Industrial
MarketView 4Q 2013
Q4 2013
CBRE Global Research and Consulting
AUSTIN
DALLAS
4.7%
EL PASO
5.6%
HOUSTON
8.2%
SAN ANTONIO
5.6%
TEXAS
5.6%
US
5.8%
6.6%
Unemployment Statistics
THE NOVEMBER UNEMPLOYMENT RATE DECREASED TO 5.8%, THE LOWEST
UNEMPLOYMENT RATE FOR TEXAS SINCE DECEMBER 2008.
8%
7%
6%
5%
4%
U.S.
Austin
Dallas/Ft. Worth
El Paso
Houston
San Antonio
Nov-13
2012
2011
2010
2009
2008
2%
2007
3%
2006
Hot Topics
• Austin had another year of healthy demand that
pushed vacancy to 9.8%, which is unprecedented
territory. Activity continues to be led by warehouse/
distribution space, but flex saw strong improvement in
Q4. Yet, rents have been very steady. Construction
remains static at low levels, which should begin to
pressure on rates given historically low availability.
9%
2005





2004





2003
San Antonio





2002
Houston





10%
2001
El Paso





11%
2000
Dallas
Vacancy
Asking Rates
Net Absorption
Under Construction
Delivered Construction
Austin
Figure 1: Quick Stats (as compared to Q3 2013)
Texas
• Dallas has had its strongest year for net absorption
Source: Bureau of Labor Statistics, Metro Areas, Not Seasonally Adjusted, Annual Rates, December 2013.
• El Paso’s leasing activity and gross absorption were
The November unemployment rate
decreased by 20 basis points (bps) over
the month, to 5.8%. This was the lowest
unemployment rate for Texas since
December 2008. Over the year, the
unemployment rate decreased by the same
amount. The national unemployment rate
dropped 40 bps over the month, to 6.6%.
The Texas unemployment rate 80 bps
below the national rate and has remained
at or below the national rate since 2007.
Over the past three months, the Labor Force
survey showed an average gain of 42,800
employed persons in Texas. Over the year,
this number has increased by 236,100
jobholders. The number of Texans actively
seeking work was 745,100 individuals in
November, a decrease of 24,900 persons
over the month for the lowest number of
unemployed Texans this year. Year-to-date,
the number of jobseekers has declined by
127,500 persons.
The Civilian Labor Force grew by 71,500
individuals in November, to 12.9 million
Texans, for the largest monthly growth in
the Texas labor force since June 2012.
Over the past year, the Civilian Labor
Force expanded by 226,200 individuals,
representing a growth rate of 1.8%.
The unemployment rate declined in
24 Texas Metropolitan Statistical Areas
(MSAs) over the month, with the AustinRound Rock-San Marcos MSA showing
the largest decrease, at 40 bps. The
lowest unemployment rate was held by the
Midland MSA, at 2.9%
Employment measured by the Labor Force
survey increased in November by 96,400
jobholders, bringing the Texas total to 12.1
million. This sets a new peak for working
Texans since the beginning of the series.
The number of Texans continuing to seek
unemployment insurance increased by
1,300 people to a level of 120,300
individuals. This was the first month in
which there was an increase in continued
claimants since July.
since the late 1990’s, bringing vacancy down to its
lowest level since 2001, at 6.6% overall. The Q4
drop in availability was the largest decline in the U.S.
Despite tight fundamentals, construction has been
holding at low levels relative to vacancy, or just over
1% of inventory, since late 2012 and only in Q4 did
activity begin to turn toward spec development.
strong for the quarter, but a large vacancy offset this
for a negative net absorption total in Q4 and for the
year. Large tenants remain active in the region with
the emerging Northeast submarket seeing the most
benefit, where vacancy fell 700 basis points over the
year. Portfolio transactions boosted sales volume
and four more are expected to trade in 2014.
• Houston’s net absorption has been positive for
13 consecutive quarters and has run at an annual
pace of about 6 million sq. ft. for two years in a
row. As of Q4, construction is up nearly 8 million
sq. ft. and deliveries for 2013, at 8.6 million sq. ft.,
doubled the total from 2012. Current construction
is in 95 buildings and 6 million sq. ft. of the total is
speculative. The extension of the Grand Parkway
opened in December, linking I-10 in Katy with
Highway 290 in Cypress and opening a new corridor
in the key Northwest distribution market.
• The San Antonio industrial market experienced gains
across the board in Q3 2013 with 428,807 square
feet of absorption and a vacancy rate of 8.3%, the
lowest rate in six years. As the market grows tighter in
space, developers are moving forward with planned
projects for much needed new development.
© 2014, CBRE, Inc.
TEXAS INDUSTRIAL FOURTH QUARTER
MARKETVIEW
Figure 3: Industry Employment breakdown by Market (000's)
1,200
1,000
800
600
400
Austin
Dallas
El Paso
Ft. Worth
Houston
Government
Other Services
Leisure & Hosp. Services
Educ. & Health Services
Prof. & Bus. Services
Information
Whsl. & Retail Trade
0
Transp., Whs. & Utilities
200
Manufacturing
1,400
Mining, Logging & Constr.
Q4 2013
COMPARATIVE EMPLOYMENT
San Antonio
Source: Texas Workforce Commission, December 2013.
TOTAL NONAGRICULTURAL WAGE AND SALARY EMPLOYMENT IN THE TEXAS
METROPOLITAN STATISTICAL AREAS (MSAs) GREW BY 56,100 JOBS IN NOVEMBER.
Transportation, Warehousing, and Utilities employment surged by 6,900
positions in November, increasing from a revised 400 jobs added in October.
The current monthly gain marked seven consecutive rises, summing the
three-month total increase to 7,900 jobs. Since January, 12,700 jobs were
added. The Dallas-Plano-Irving area led all areas by adding 1,600 jobs
over the month, followed closely by the Houston-Sugar Land-Baytown MSA
with 1,500 jobs. The San Angelo MSA led all areas in terms of growth rates
with a 10.0% jump. Transportation, Warehousing and Utilities added 11,600
jobs over the year for a 2.9% annual growth rate among the MSAs. Although
annual growth for November 2013 was not as high as last November, annual
employment expansion has now continued for 41 consecutive months.
The Midland MSA attained double-digit growth for the year with a 10.0%
annual growth rate. The Sherman-Denison MSA was next with an 8.3%
annual growth rate. Manufacturing slipped by 300 jobs in November
to reach an employment level of 771,900 positions. This over-the-month
loss was the first November decrease since 2009 and the fourth monthly
loss for 2013. Year-to-date, 11,100 jobs were added in Manufacturing.
The Fort Worth-Arlington area led all areas by for monthly growth with
a 2.0% employment increase. Three other areas experienced growth,
namely the Tyler, Waco and Houston MSAs. Over the previous 12 months,
Manufacturing added 7,200 jobs for a 0.9% annual growth rate. Although
this rate slowed from October’s 1.0% growth rate, November marked
38 consecutive months of positive year-over-year growth. Ten areas saw
increased in employment over the year, led by the Fort Worth-Arlington
area with a 6.6% annual growth rate.
Figure 4: Industry Employment breakdown (000's)
INDUSTRY
2
Mining, Logging & Construction
Manufacturing
Wholesale & Retail Trade
Trans, Warehouse & Utilities
Information
Prof & Bus Services
Educ & Health Services
Leisure & Hospitality Services
Other Services
Government
Total Nonfarm Employment
AUSTIN
DALLAS
EL PASO
45.9
51.2
142.7
14.5
22.8
46.3
138.2
100.5
97.0
36.4
168.4
863.9
117.6
161.7
364.1
78.5
65.0
200.0
400.9
270.4
212.0
75.8
271.6
2217.6
13.0
17.7
48.2
13.3
5.0
12.7
29.3
39.0
31.0
10.3
67.5
287
FT WORTH
63.6
98.8
149.6
67.3
13.5
55.2
109.5
122.9
105.3
33.6
126.0
945.3
HOUSTON
292.7
253.1
453.7
134.9
33.1
140.0
428.5
347.1
270.3
93.6
382.4
2829.4
SAN ANTONIO
45.7
45.9
133.5
22.8
21.1
70.4
111.8
136.9
109.2
33.8
166.1
897.2
TEXAS
898.9
872.9
1,848.3
456.7
205.6
672.7
1,505.3
1,517.4
1,136.4
387.5
1,845.2
11,346.9
Source: Texas Labor Market Review, December 2013.
© 2014, CBRE, Inc.
MARKET STATISTICS
© 2014, CBRE, Inc.
000's
16,000
14,000
12,000
10,000
8,000
6,000
4,000
Austin
Dallas/Ft. Worth
El Paso
Houston
2013
2012
2011
2010
2009
2008
2007
2006
2005
2003
2004
2,000
Sq. Ft. 0
San Antonio
Figure 6: Vacancy
24%
22%
20%
18%
16%
14%
12%
10%
8%
Austin
Dallas/Ft. Worth
El Paso
Houston
2013
2012
2011
2010
2009
2008
2007
2006
2005
4%
2004
6%
San Antonio
Figure 7: Monthly Gross Asking Rates, Per Sq. Ft.
$0.70
$0.65
$0.60
$0.55
$0.50
$0.45
$0.40
Austin
Dallas/Ft. Worth
El Paso
Houston
San Antonio
2013
2012
2011
2010
2009
2008
2007
$0.30
2006
$0.35
2005
Austin: Citywide monthly average asking rates saw a slight increase from the
previous quarter, reaching $0.63 per sq. ft. While warehouse rates showed no
change from Q3, flex product saw an increase of $0.03 per sq. ft., reaching
$0.78.
DFW: This quarter saw average asking lease rates for both flex and industrial
increase. The definitive conclusion for the DFW market remains one in which
rents are trending higher with fewer concessions. As space tightens further, lease
rates are anticipated to rise.
El Paso: After having steadily increased from 2008, lease rates seemed to
have leveled off in 2012. This quarter, the average asking industrial lease rate
saw its first increase in the last five quarters. Annual average asking lease rates
increased to $3.62, from $3.58 per sq. ft. in the previous quarter.
Houston: Tight market conditions are favoring annual rent increases and
minimal free rent periods. Average quoted gross monthly rental rates are $0.45
per sq. ft. for warehouse/ distribution space, $0.79 per sq. ft. for flex/service
space, and $0.45 per sq. ft. for manufacturing space.
San Antonio: The overall NNN average annual asking rate for available
industrial space increased in Q4 2013, to $5.85 per sq. ft. Flex space rents
averaged $9.05 per sq. ft. and warehouse/distribution rents averaged $4.25.
per sq. ft.
18,000
2004
Lease rates, gross overall
20,000
2003
Austin: Citywide vacancy finished 2013 by dropping quarter-over-quarter
to 9.8%. Flex product saw a slightly greater drop in total vacancy, falling 90
basis points, compared to warehouse space vacancy falling 80 basis points.
DFW: Vacancy rates continue to set new, historically low figures. The direct
vacancy rate is 6.5% and total vacancy is not much higher, at 6.6%. These
rates further emphasize the limited space for tenants.
El Paso: Year-over-year, the vacancy rate increased slightly, from 13.9%
to 14.4%, due to a handful of large vacancies. Several market segments
remain tight, specifically on the Eastside of town.
Houston: Completions are outpacing absorption with the overall vacancy
rate rising from 5.1% in Q3 2013 to 5.3% in Q4 2013. At the end of the
fourth quarter, Houston had 24.4 million sf. ft. of vacant industrial space
citywide, 975,000 sq. ft. more than the previous quarter.
San Antonio: Vacancy for Q4 2013 posted at 8.3% overall. The Northeast
submarket remains the strongest throughout the market with a vacancy
rate of 6.8% and the Northwest submarket following with a vacancy rate of
10.7%.
22,000
2003
Vacancy
Figure 5: Construction
Austin: The initial phase of the 120,000 sq. ft. 130 Commerce Center
is slated to finish construction early next year. It is 100% pre-leased to
Tracking Point, a high-tech scope manufacturer, and FedEx. Heritage
Crossing, a three-building warehouse park in the increasingly-tight North
Submarket, is still on track to finish construction by early 2014.
DFW: Fourth quarter deliveries totaled 4.6 million sq. ft., representing
the most completions since 2008, nearly double the combined total of
the previous three quarters. Deliveries should continue to rise with under
construction figures up sharply over the past few quarters. This quarter
saw an addition of 3.0 million sq. ft. to the construction pipeline, as well
as the inclusion of 1.3 million sq. ft. warehousing/distribution portion of
Nebraska Furniture Mart.
El Paso: The supply of industrial buildings in El Paso changed as two
construction projects were delivered in the West submarket. All of the
58,000 sq. ft. completed are part of expansion projects in the Santa
Teresa Industrial Park and represent the only new space delivered in 2013.
Houston: During Q4 2013, 32 buildings, totaling 7.8 million sq. ft. were
completed. The top completion is Katy-based Igloo Products new 420,000
sq. ft. distribution facility in West Ten Business Park. There are currently 95
buildings under construction, totaling 7.8 million sq. ft. The largest project
is the 600,750 sq. ft. building at Greens Crossing 1 in the 971-acre Pinto
Business Park located in north Houston. The building is 83% preleased
with major tenant, HD Supply, taking 500,000 sq. ft.
San Antonio: In Q4, the new 1.2 million sq. ft. Amazon fulfillment center
delivered in Schertz, Texas, which is in the Northeast submarket. Also in
Schertz, construction has broken ground on a much needed industrial spec
building. The new, Class A building will be 315,362 sq. ft. and located off IH35 and Lookout Road in the Enterprise Industrial Park. The project is expected
to deliver in Q2 2014.
Q4 2013
Construction
3
MARKET STATISTICS
Q4 2013
MARKET
SQ. FT.
BUYER
ADDRESS
SUBMARKET
Austin
301,644
Casa Marco Texas, LLC
201 W Howard Lane
Northeast
Dallas/Ft. Worth
617,760
Brookfield
W Springfield & Oak Farms Blvd.
South Dallas
El Paso
486,403
Stonelake Capital
Spur and Butterfield
Northeast
Houston
549,075
IntePlast
Hobby Business Park
South Highway 35
San Antonio
60,399
Mel Friedman
12909 Delivery
North Central
• The Houston Business Journal reported that The
Pines Business Park, a 139,330 sq. ft. business
park, was sold in December 2013. The Pines
comprises three light industrial buildings in
North Houston at 26009 Budde Road, off of
I-45. Constructed in 2009, the property has
suites ranging in size from 7,000-to-45,000 sq.
ft. At the time of the sale, the Class A buildings
were fully leased. The Grand Parkway, the new
toll road connecting Katy to Kingwood, is being
credited with driving the transaction.
MARKET
Austin
SQ. FT.
BUYER
72,000
Dallas/Ft. Worth
1,400,000
ADDRESS
SUBMARKET
VTC, LLC
110 Old Settlers Boulevard
Northwest
Proctor and Gamble
I-45 and Dalport
South Dallas
• REBusiness Online reported that ElmTree Net
El Paso
126,000
Handgards, Inc.
32 Celerity Wagon Street
Northeast
Houston
600,000
Frontier Logistics
225 Railport
Gulf Freeway/Pasadena
Conn's
1912-1924 Shipman Drive
Northeast
San Antonio
60,000
More Top Sale Transactions
• The Fort Worth Star-Telegram reported that
the former Motorola plant in the Fossil Creek
Business Park at 5555 N. Beach St in north Fort
Worth has been sold to Capital Commercial
Investments (CCI). CCI plans to lease the
665,545 sq. ft. building on 54 acres to a new
tenant. The property is one of three buildings
totaling more than 1 million sq. ft. that Motorola
developed.
Lease Fund II has acquired a 300,000 sq. ft.
industrial property in the San Antonio suburb
of Seguin. FCA LLC, a third-party logistics
provider for Caterpillar, leases the manufacturing
and distribution facility, which is expandable to
395,000 sq. ft.
More Top Lease Transactions
Notable Austin deals from Q4 2013 include:
• The Travis Association for the Blind occupied
Figure 10: Absorption, Sq. Ft.
150,000 sq. ft. at the Intercraft Manufacturing
Facility.
18
• Genesis Today moved into 108,327 sq. ft. at
16
Bergstrom Tech Center.
Million Sq. Ft.
14
• Flextronics expanded into 25,000 extra sq. ft. at
12
McNeil 1.
10
• Genesis Today moved into 22,500 sq. ft. at 21
8
Cypress in Round Rock.
6
• Hostgator commenced on 46,893 sq. ft. at
Promontory Point C.
4
2
Notable San Antonio deals from Q4 2013 include:
0
• Notable San Antonio deals from Q4 2013
(2)
2003
2004
2005
Austin
4
2006
2007
2008
2009
Dallas/Ft. Worth
El Paso
Houston
2010
San Antonio
2011
2012
2013
include:
• Conn’s at San Antonio Distribution Center 7 with
60,000 sq. ft.
• Goodwill expanded by a total of 24,785 sq. ft.
within Salado Creek Business Park.
• Southern Warehousing will be going into 40,326
sq. ft. at 1400 Currency Dr.
• Aviation Technologies relocated from Macro
Distribution Center 4 to Woodlake Center, where
they will occupy 44,680 sq. ft.
• Total Media Solutions will take 18,900 sq. ft. at
3535 Pan Am Expressway.
© 2014, CBRE, Inc.
CONTACTS
Q4 2013
For more information about this
Texas Industrial MarketView,
please contact:
TEXAS RESEARCH
Leta Wauson
Senior Research Analyst
CBRE Houston Research
Houston, TX 77056
t: 713 577 1604
Nick Ianetta
CBRE Austin Research
t: 512 499 4939
Lynn Cirillo
CBRE Americas Research
Lexi Zager
Researcher
t: 214 979 6532
Veronica Gonzales
CBRE San Antonio Research
t: 210 253 6019
Pedro Nino, Jr.
Reseach Coordinator
CBRE El Paso Research
t: 915 313 8816
+FOLLOW US
GOOGLE+
FACEBOOK
TWITTER
GLOBAL RESEARCH AND CONSULTING
This report was prepared by the CBRE U.S. Research Team which forms part of CBRE Global Research and Consulting – a
network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric
forecasting and consulting solutions to real estate investors and occupiers around the globe.
DISCLAIMER
Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we
have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and
completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be
reproduced without prior written permission of the CBRE Global Chief Economist.
© 2014, CBRE, Inc.
5

Industrial demand points to one major trend: population growth

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