Industrial Retains Strength Despite Drop in Crude Prices

Aerial shows proposed site for build-to-suit facility.

PASADENA, TX—Despite a drop in crude prices, Houston’s industrial market remains resilient. According to the Greater Houston Partnership , the Port of Houston ranks as the largest port in the country by foreign tonnage for the 19th consecutive year. In terms of container traffic, the port is the nation’s sixth-busiest, handling 67% of the container traffic along the Gulf of Mexico. At 476 million square feet, Houston’s industrial market is quickly gaining ground on Detroit, the fifth-largest industrial market in the country. Within that flurry of activity, Ridge Development , the industrial development arm of Transwestern Development Co. , has been selected as the master developer for 55.89 acres of Port of Houston Authority land near the Bayport Container Terminal , located at 12619 Port Rd. As part of the development arrangement, Ridge plans to construct build-to-suit facility on 38.38 acres it controls via a ground lease with the Port of Houston Authority . Ben Newell, senior vice president of Ridge Development, tells GlobeSt.com: “Houston, specifically the east side of the city, is on a healthy trajectory despite low oil prices, namely due to the $30 billion worth of petrochemical plants under construction. The East-Southeast submarket continues to be one of the more active industrial submarkets in Houston, demonstrated by a 0.3 percent decline in vacancy and more than 2 million square feet of absorption last year. We expect the high demand for port space to continue for the next few years.” Ridge has proposed two building options: a 449,280-square-foot, cross-dock building or a 450,684-square-foot, rail-served facility. Both scenarios include 199 trailer storage spaces, making it one of the most functional distribution centers in the Southeast Houston submarket. In the current design, the rail-served alternative includes the ability to store 280 railcars on-site. “This project will meet the critical demand in the port area for rail-served industrial buildings,” said Kent Newsom , executive vice president for Ridge. “We are in talks with several potential tenants that have shown significant interest in the flexibility and capacity that this site holds.” Ridge also will oversee development of a 300,000-square-foot cold storage facility for AGRO Merchants Group on 17.51 acres. AGRO, which specializes in third-party cold storage, warehousing and value-added services, has retained Ridge to oversee site due diligence and provide development consulting services for its new facility. The development site is located less than 1 mile from the Bayport Container Terminal. The Port of Houston has plans to construct a new heavy haul road, called Freight Station Road, to provide access from the northeast corner of the site from Port Drive, which is a unique benefit for heavy port users. “The site represents a rare opportunity to develop a much-needed industrial project within a mile of a world-class container terminal,” said Newell. “The location’s logistical advantage provides future tenants considerable benefits in terms of drayage costs and supply chain velocity.” The port’s real estate department, under the direction of Ricky W. Kunz , chief commercial officer, handled the lease negotiations on behalf of the port. RD Tanner , senior real estate director, was the lead negotiating executive for the port. KKNJ Properties LLC, owned by Curtis Spencer , will handle the leasing of the site for Ridge Development.