With ongoing demand for warehouse and distribution space in Central Texas, massive industrial projects are on track to be neighbors to Tesla's Gigafactory near Southeast Austin.
The developments come in a part of the region that is seeing explosive growth, including thousands of new apartments, single-family homes, commercial development and more.
One of the latest industrial projects broke ground in May by St. Louis-based developer Sansone Group, partnering with Principal Asset Management. Located off the Texas 130 toll road, the project ultimately will bring more than 1.35 million square feet of industrial space in six buildings, to be constructed in three phases.
The development, Austin Hills Commerce Center, is being built on about 134 acres at 11801 Decker Lake Road, a few miles north of Tesla Inc.'s 4.3-million-square-foot electric vehicle manufacturing plant.
The Austin region's population growth and “robust industrial market fundamentals" make the area a good fit, Nick Sansone, principal at Sansone Group, said in an email.
“Austin maintains its status as one of the nation's leading growth markets, fueled by sustained demand in the industrial sector, particularly from suppliers serving companies such as Samsung and Tesla,” Sansone said.
What else is coming?
Another big project near the Gigafactory is being developed by Link Logistics Real Estate LLC, an arm of Blackstone Inc. Link Logistics plans to build more than 1 million square feet of industrial space for its project, called Juniper Crossing.
Juniper Crossing will have four industrial-use buildings totaling 1.1 million square feet of space. It will be built on about 127 undeveloped acres at 11902 FM 969, not far from Tesla's electric vehicle manufacturing plant. Link Logistics bought the land in 2021.
The company hasn't released a projected timetable for breaking ground and completing the project or an estimated cost to build it.
“Link Logistics has been leading Austin's industrial sector, delivering over 1.5 million square feet of space in the past 15 months, with 70% already leased," Brian Strohl, senior vice president of Link Logistics’ Central Region Development, said in an email. "With ongoing demand driven by major manufacturers moving to Austin, our developments, such as Juniper Crossing, are well-positioned to meet the city's expanding logistics needs."
What are other details about Sansone's project?
Austin Hills' first phase will have three buildings totaling 538,000 square feet of space, with a targeted completion in the second quarter of 2025.
The second phase will be a single building with 682,000 square feet of space that is due to be completed in the third quarter of 2025. The final phase will be two buildings with 132,000 square feet of space, with completion estimated for the first quarter of 2026.
Sansone says the project will be suitable for a Tesla supplier, and it can accommodate tenants of all sizes needing manufacturing and distribution space. Burton Construction is leading the design and construction of Austin Hills Commerce Center, and Stream Realty will handle the leasing.
Elsewhere in the region, Sansone is working on two cold storage projects, including one in Hutto that it is partnering on with Titan Development.
What's the state of Austin's industrial market?
Israel Linares is senior market analyst in Central Texas for CoStar, which provides commercial real estate data and analytics. Linares said tenants looking for industrial space remain "very active" across the Austin region. Here are a few highlights from Linares:
- The manufacturing industry continues to become a pillar of the industrial tenant base, building off of the presence of companies such as Samsung and Tesla.
- The far east side of Austin is emerging as the next frontier for the industrial market. Mobility will play a big role in driving demand from companies in the automotive, distribution or semiconductor industries.
- Areas in far East Austin also are growing in population. That offers distributors or manufacturers a deeper labor pool to operate new industrial facilities.
- In the first half of this year, tenants signed leases totaling more than 4.5 million square feet of space. The market has cooled compared with 2021 to 2023 levels, but it is still above the pre-pandemic average. In the second quarter of this year, industrial space in Central Texas was 90.1% occupied, down 2.6 percentage points from 92.7% of the year-ago quarter.
- Looking back at 2023, a little over 13 million square feet were leased, a landmark year for Austin. It matched some of the historic leasing volumes seen in 2021 and 2022.
- Austin's occupied industrial space grew by 4.2 million square feet in the first half of 2024. Austin historically saw occupied space expand by 2.5 million square feet per year between 2015 and 2019, underscoring the strong demand for industrial space right now.
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