Industrial Lease Takes Down Critical Space

More than 2 million square feet of retail and lodging are within one mile.

AUSTIN, TX—Currently, there is a limited amount of large-block, contiguous industrial space available in Austin, with overall vacancy rates at 4.8%. This is roughly half of the current vacancy for office space, which is nearing 10.4%, as new product continues to deliver to the market. The lease to LKQ Corp. at Heritage Crossing , a class A industrial development in north Austin, encompasses 126,782 square feet of space, the largest lease of last year. Clarion Partners completed construction on the building, located at 2500 Scarbrough Dr. in the Wells Branch district in 2014. Avison Young’s John T. Baird, Jeff Bodenman and Jacob Bobek worked in collaboration on behalf of LKQ Corp. Andrew Alizzi , research coordinator, Avison Young, tells GlobeSt.com: “Austin’s industrial market, the city’s smallest commercial sector in terms of transactional and construction activity, remains healthy for a city that is not as well-positioned for large scale distribution initiatives as are cities like San Antonio or Houston. While new industrial space in Austin is not often developed on a speculative basis, the current construction pipeline suits the city’s demand trends. Austin’s most significant industrial market trend of interest is the recent increase of industrial investment activity. Total industrial investment volume in Austin increased 58% from the year prior during 2015, according to data from Real Capital Analytics . Particularly, we have seen a recent rise in industrial investment for the purposes of re-development. Creating mixed-use projects with creative office and residential components can be more profitable for ownership and such product feeds the demand of Austin’s growing creative and technology industries.” As a comparison, according to Avison Young, four office buildings totaling 464,000 square feet were delivered in 2015′s third quarter and another 2.4 million square feet of office space is now under construction. In the industrial arena, currently two industrial buildings are under construction, totaling 289,000 square feet. “The availability of industrial buildings of this quality and size is exceptionally limited in the region. We are excited for LKQ and pleased they were able to align their business with their industrial real estate requirements. The city of Austin, and Central Texas in general, has a very limited amount of industrial space for lease. The number of existing contiguous blocks of class-A product exceeding 100,000 square feet can be counted on one hand,” says Baird. Heritage Crossing is an industrial development in North Austin offering 447,996 square feet of space. Located at IH-35 and Scarbrough Lane, Heritage Crossing offers a location with highway visibility and easy access to Austin and surrounding communities. More than 2 million square feet of retail, lodging and restaurant amenities are within one mile of Heritage Crossing. LKQ Corp. is a provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles.