Developers Count Out Multilevel Industrial Development In Houston
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While the demand for industrial buildings is expected to remain robust in 2019, developers don't foresee multilevel industrial development taking off in Houston like it has in other major metros.
"It doesn't work for our market," Davis Commercial Development principal Jeff Stringer said during Bisnow's Industrial & Logistics Outlook in Houston Tuesday.
There is only one place he sees multilevel warehouses as a possibility, and it is a place people aren't really clamoring for industrial.
"If someone wants to put an industrial building in Downtown Houston then it is the wave."
Multilevel warehouses have begun to pop up around the country as a solution to constructing in more dense, expensive urban areas to accommodate the growing demand from online shopping and expectations of immediate delivery.
This type of development makes more financial sense in areas where the dirt is more expensive, because the construction costs for multilevel are triple that of a traditional warehouse, Stringer said.
The trend is becoming more popular on the East and West Coasts where the industrial dirt can be upward of $80 to $90/SF. In Houston, the most expensive industrial land is between $5.25 and $7/SF. If land costs jump tenfold in Houston then it becomes a more suitable solution, NAI Partners partner Travis Land said.
San Francisco-based Prologis was the first to construct a multilevel industrial warehouse in the United States. Georgetown Crossroads, a three-story, 590K SF building, opened in Seattle last summer.
This isn't new territory for the company as it had already built 53 similar facilities in Asia, Prologis Senior Vice President and Market Officer for Seattle Richard Kolpa previously told Bisnow. Prologis is the world's largest warehouse owner.
Prologis redeveloped a 205K SF, two-story warehouse in New York City and has a multistory project under construction in San Francisco. Renovations of the NYC building, which was acquired in March 2017, include 10 loading docks to accommodate 53-foot trailers, vertical lift systems, roof-mounted heating units, a renovated 10,000-pound freight elevator, LED lighting and an early suppression fast response sprinkler system.
The George R. Brown Convention Center is one of the only examples in Houston of multilevel loading and unloading, Powers Brown Architecture principal Nazir Khalfe said. He doesn't believe multistory industrial buildings are viable in Houston, despite the hype around them.
"It is a buzzword like automated Tesla trucks," Khalfe said.
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