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By Justin Boyar, Bill Kitchens and Sam Tenenbaum – CoStar Analytics

Texas is an industrial juggernaut boasting several advantages for industrial tenants. Geographically, it’s centrally located in the United States with a wide network of interstate highways and railways. The Port of Houston is the largest net export port in the nation and first in terms of international cargo and the state possesses several hubs for air freight, including DFW International, Alliance Airport and Bush Intercontinental Airport. Industrial leasing across Texas’ four major markets accounts for 13% of total leasing in the country.

Here’s a look at how industrial leasing activity has fared in each of the four markets.

Dallas-Fort Worth

The momentum in the Dallas-Fort Worth metroplex continues through mid-2021. From January through May, leasing activity is up 25% compared to the same period last year. Tenants are most active in areas with excellent transportation channels, including interstate highways, rail and air. Walmart represents the largest lease thus far, taking 1 million square feet in the Northeast Tarrant/Alliance market; the retail giant is moving into a recently completed industrial space at Alliance Westport developed by Hillwood. In south Dallas, Yokohama is committing to take 432,000 square feet in a space that’s still under construction near the Dallas Inland Park, which was developed by Duke Realty.

Robust leasing activity is bringing more speculative development in the metroplex: Through June, the share of available space under construction is trending toward 70%, the highest rate since 2015. Development for the market overall has reached its highest point on record, reaching 41 million square feet.


Houston industrial volume was up 70% through the first five months of 2021 compared with the same period last year. Some of the largest leases in the second quarter include: Living Spaces Furniture Co. for 685,000 square feet at the Air 59 Logistics Center in Humble in June, the WebstaurantStore for 645,000 square feet at 4725 E. Grand Parkway S. in Baytown in May, FedEx for 535,000 square feet at 505 Aldine Bender Road in North Outer Loop in April and Custom Goods for 355,000 square feet at the Bay Area Business Park in Pasadena in June.

Houston ranked sixth in the nation for net absorption, the difference between move-ins and move-outs, over the past four quarters. The market absorbed nearly 15 million square feet even as it ranked second after Dallas-Fort Worth for new deliveries, raising some oversupply concerns.

Austin and San Antonio

Most industrial markets around the country have seen exceptional performance throughout the pandemic, but Austin has seen one of the best performances nationwide. While Austin’s certainly not the size of a Dallas-Fort Worth or a Houston, only Charleston, South Carolina, saw more leasing activity relative to the market’s inventory than Austin has seen over the past year. Outside of the ongoing Amazon construction projects, the company also leased more than a million square feet in Austin over the past 18 months.

Both San Antonio and Austin represent considerably smaller industrial markets than their fellow Texas markets. Like most areas around the country, Amazon has helped drive leasing activity across central Texas. The e-commerce giant is building four separate facilities across the two metropolitan areas, totaling roughly 10 million square feet. With both San Antonio and Austin boasting some of the best population growth in the country over the past decade, it’s possible more e-commerce tenants will follow Amazon’s lead in the coming years.

Other leasing activity in central Texas’ industrial market will likely be a result of continued growth in a burgeoning auto-part manufacturing industry. Companies continue to set up operations along the Interstate 35 corridor to support Tesla in Austin and Toyota in San Antonio. In fact, Simwon, a Tesla supplier, recently announced that it would be taking nearly 500,000 square feet in Kyle and creating about 400 jobs.

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Sairam Kota

Sairam is an experienced multifamily deal sponsor and asset manager for 738 units, a key principal in 332 units and limited partner in 1000 units. He has a strong experience in asset management, property reposition, income generation, implementing operational efficiencies and cost reduction. Sairam is a licensed Real Estate Broker in the state of Texas. He is a successful IT Consultant with 20+ years of experience in corporate America.