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Industrial development spikes due to market trends

Tomball and Magnolia are becoming the new hot spots in the Greater Houston area for industrial development, according to local developers. The cities are benefiting from relatively low building prices per square foot in comparison to other parts of the Greater Houston area as well as an abundance of available lots.

Since 2014 at least 10 new industrial parks have been constructed, expanded or are due to be renovated in the Tomball and Magnolia area. These multimillion-dollar developments total more than 1 million square feet of space and have the potential to bring thousands of new jobs to the area.

“Most of the way real estate works in Houston is from the center out,” said Jon Sellers, developer and broker at Houston-based The National Realty Group, or TNRG. “You’ve got all of these infill [development] sites that are disappearing. You’ve got Tomball, Magnolia, Cypress and Sugar Land as you work around the Grand Parkway. Those areas are the next foray of builders going in and doing projects.”

Tomball’s industrial footprint

Two of the newest industrial developments in Tomball include the 120-acre Tomball Business and Technology Park and the 12-acre Tomball Industrial Park.

In July, the first tenant of the new 97.5-acre Tomball Business and Technology Park—international oilfield services company Packers Plus Energy Services—broke ground on its 17.4-acre tract to consolidate its Houston operations into a single campus, said Tom Condon Jr., broker of the park and senior vice president of Colliers International.

The $21 million project will be constructed in three phases and is expected to bring 353 new jobs to the area over the next decade, Condon said. The company’s 50,000-square-foot Phase 1 research and development facility is slated for move-in by March, he said.

The second phase includes a 237,000-square-foot manufacturing facility, and the third phase features a 40,000-square-foot office building, which are both expected to be occupied by 2018, Condon said.

“With somebody as sizeable as Packers Plus moving in, it certainly helps establish the credibility of the park,” Condon said. “We would expect interest would continue to rise. Activity begets activity, and seeing something vertical is going to help.”

A second tenant—Nickson Industrial Warehouses—is now under contract to break ground later this year on 5.12 acres. Nickson plans to construct two 25,200-square-foot office warehouses with 10-ton crane-ready capabilities to lease out to future tenants, Condon said.

With 60.8 remaining acres to develop, the Tomball Economic Development Corporation has received interest from a technology company looking to acquire 3 acres and a large manufacturing prospect seeking 10 acres, TEDC Executive Director Kelly Violette said. Violette said she anticipates another contract will be secured by November.

“We are creating an employment center,” Violette said. “Being able to have a location like our park that is already zoned, deed-restricted and has infrastructure in place to support those types of uses definitely puts us in a position of economies of scale.”

Near the Tomball Business and Technology Park, TNRG completed construction in August on its first four industrial buildings at the Tomball Industrial Park, Sellers said. The buildings range from 11,010 to 18,000 square feet with future plans to expand, he said.

Since July, TNRG has seen a surge in inquiries from oil and gas, construction and other companies looking to relocate to the park and is in the process of negotiating three deals, Sellers said. TNRG anticipates the buildings at the park will be sold and fully occupied in about six months, he said.

Developing Magnolia

In the Magnolia area, two of the newest industrial projects include the planned expansion and renovation of the estimated 400,000-square-foot Superior Business Park along FM 1488—now known as the West Lands Centre—and the expansion of the Decker Prairie Business Park.

“We’ve known for years there’s a lack of supply for solid product for the industrial flex sector,” said Trey Halberdier, founder and president of The Woodlands-based Halberdier Real Estate and developer of the West Lands Centre.

In July, Halberdier acquired the 46-acre West Lands Centre with plans to begin construction in early 2016 on new office and industrial space as well as high-end retail options.

The 57,000-square-foot Decker Prairie Business Park is another large-scale industrial development that expanded this year, park developer Zachary Oliphant said.

“There’s quite a few industrial parks that have been built, especially in the Tomball area and south,” Oliphant said. “We were real happy we’re one of the few out in the Magnolia-Pinehurst area,” Oliphant said. “One of the big benefits is we’ve attracted several people for welding and things of that nature.”

“We are creating an employment center. Being able to have a location like our park that is already zoned, deed-restricted and has infrastructure in place to support those types of uses definitely puts us in a position of economies of scale.”

—Kelly Violette, executive director of the Tomball Economic Development Corporation

Scope of market

For leasing rates on move-in ready sites, monthly asking prices per square foot in Tomball tend to range from $0.60-$0.80 and average about $0.72 in Magnolia in comparison to a range of $0.85-$0.95 for prime locations along Beltway 8 in the Greater Houston area, officials said.

In the Greater Houston area market, buildings under 12,000 square feet are in high demand because loans are easier to obtain, and investors are willing to spend $600,000 to $1 million on a building, Sellers said.

“Industrial park incentives are included on the city of Magnolia’s action priorities list,” Magnolia Economic Development Coordinator Tana Ross said. “As the city continues to grow and annex, we welcome additional industry. There is a lot of land available in Magnolia.”

Lower building square footage asking and leasing prices helps makes Tomball and Magnolia a hotbed for industrial development, Halberdier said.

“I think a lot of users are seeking alternative options outside of the high prices potentially coming out of The Woodlands and have set up shop to the west where they can get more affordable pricing,” he said.

For startup or home-based businesses looking for move-in ready space, industrial parks are a vital and affordable upgrade, Oliphant said.

“Having started my original company back in 2002 and leasing space—to have the ability to have a light industrial space to lease to grow your business is critically important,” Oliphant said.

“Especially when you’re first starting and can’t afford to build a building or property or don’t have the expertise to do it.”