By BF Editors
From the May/June 2022 Issue
Before the Covid-19 pandemic, online shopping and other eCommerce channels had been on an upswing for years. When consumers turned to the internet to purchase more and more items during the pandemic, this trend spiked and shows no sign of slowing down. As such, demand for distribution center spaces has skyrocketed, and companies in this space are continuing to find the right balance (and locations) for distribution facilities for eCommerce operations.
In October 2020, The NAIOP Research Foundation commissioned a report to provide the real estate development community with insight into current and future trends in building and logistics technologies and their implications for industrial real estate. Titled “The Evolution of the Warehouse: Trends in Technology, Design, Development, and Delivery,” the report: “evaluates how the expansion of e-commerce sales and the acceleration of delivery times are supporting greater automation within distribution facilities; examines emerging trends in logistics technologies and how they affect the design and use of industrial buildings; and explores how new technologies and supply chain patterns are creating opportunities for innovative building design and blurring boundaries between industrial and retail uses.”
Authored by Steve Weikel, currently a lecturer, researcher, and the Industry Chair of the Real Estate Technology Initiative (RETi) at the MIT Center for Real Estate, and James Robert Scott, a lecturer, researcher and the CRE Tech lead in the MIT Real Estate Innovation Lab, the document is available for download for interested parties.
An observation in that report’s executive summary: “Data analytics and artificial intelligence (AI) will increase the efficiency of supply chains and industrial real estate. Data collected along the supply chain and from operations within logistics buildings will help developers make better locational decisions and will improve facilities’ operational performance.”
In a 2021 piece from Cushman & Wakefield, that firm made this observation: “As available Class A space inventories diminished over the last few years, e-commerce tenants have been extremely active within new construction and development sites, willing to pay higher rents for new, modern logistics space in key locations. Cushman & Wakefield is anticipating total industrial demand to remain robust as roughly 800-850 msf of space will be absorbed from 2022-2023. E-commerce occupiers are projected to continue to account for between 35-40% of this demand as consumer shopping habits will not reverse course from the current upwards trend.
As market conditions are anticipated to remain at historically tight levels, despite the plethora of new supply expected to deliver in 2022 and 2023, eCommerce and other top occupiers of warehouse space will be pushed to focus on new development options, which boast premium taking rents. Rent growth for warehouse and logistics space should rise by more than 15% over the next two years with Class A and new construction rents expected to grow at an even higher rate.”
Tomball, TX: A Prosperous Hub for Distribution And eCommerce
An ideal business environment and advantageous location has positioned Tomball, TX, just 30 miles north of Houston, as a desirable place for corporate investment. Infrastructure improvements, a capable workforce, and shovel-ready land give businesses what they need to thrive. A spate of recent distribution and eCommerce projects showcase Tomball’s amenities and prosperous economic atmosphere.
Lovett Industrial and Clarion Partners broke ground in March on a 240-acre development at Highway 249 and Rocky Road, directly south of the Grand Parkway. The development is expected to include more than three million square feet of class A industrial and retail space. When complete, Interchange 249 will become one of the premier business parks in the Houston metropolitan area.
In February, the Tomball Economic Development Corporation (TEDC) and Macy’s, Inc. announced the company’s plan to expand operations from its current Houston distribution center into a modern facility inside Interchange 249. The 900,000-square-foot distribution center will provide substantial opportunities for growth in future years. The facility will continue to support customers across the country focusing on furniture, bedding, and toy fulfillment during peak season with opportunities to expand into online fulfillment.
The Tomball Business & Technology Park, which ranked as the 10th best industrial park in the nation and the fourth best in Texas, according to Business Facilities, is another ideal setting for distribution and eCommerce. The 99.5-acre park is fully served with all utilities, provides off-site detention, and has quick access to Tomball’s major highways. Operated by the TEDC, the master-planned and deed-restricted light industrial park utilizes flexible lot sizes and competitive pricing.
A host of businesses have moved into the Tomball Business & Technology Park in recent years. With recent approvals from Tomball City Council and the TEDC, the park’s utilization has eclipsed 75 percent.
ECommerce jewelry company, Kinsley Armelle, moved its headquarters to the Tomball Business & Technology Park in 2021. The company occupies 4,000 square feet of office and 21,000 square feet of warehouse space to deliver its products to more than 200,000 customers and 4,000 vendors worldwide.
Favorable to distribution and eCommerce is Tomball’s connectivity. Investments in infrastructure have helped Tomball keep up with economic growth. Expansions to Tomball Parkway and Grand Parkway drive accessibility from Tomball throughout the region. And, key road extensions make traversing from key points in the city easier than ever. Connectivity to and from Tomball is greatly benefiting businesses relying on timely distribution.
A capable and expanding talent pool helps businesses in Tomball find the workforce they need to thrive. The TEDC works closely with award winning Tomball Independent School District and Lone Star College-Tomball, as well as other stakeholders, to coordinate workforce development efforts.
From location to infrastructure and land to workforce, Tomball stands out for its comprehensive offerings. Thanks to these advantages, distribution centers and eCommerce retailers continue to find exactly what they desire in Tomball.