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Austin’s Industrial Market Reaches New Heights - But Will It Stay There?

By Bob Mohr | Featured in Texas Real Estate Business, July 2021

When people talk about Austin, they call it one of the best places in the country to live. They talk about the live music scene, the die-hard fans who flock to The University of Texas football games and the hills spouting bluebonnets.

They talk about Austin attracting California residents and companies during the pandemic, bolstering the city’s tech base and positioning it as a significant Silicon Valley rival. They talk about office demand and increasing single-family housing costs.

Few people mention Austin’s industrial market, but they really should, because there’s a heck of lot to talk about. At 55 million square feet, Austin’s industrial market is still fairly small, especially compared with the Lone Star State’s big three metros of Dallas-Fort Worth, Houston and San Antonio.

Despite its size, the Austin industrial market is experiencing significant demand from various companies, particularly e-commerce and service-related tenants. And even though Austin tends to be a bit of a bubble market, money is flowing in the form of new construction and investor interest.

Potholes in Road to Expansion

Unless you’re Amazon or Tesla, it’s not easy to develop bulk industrial in the Austin area under normal circumstances, and the pandemic has made it even more challenging. The topography everyone loves so much because of the rolling hills makes industrial development difficult. Zoning adds another layer of complexity.

When it comes right down to it, Austin is a progressive city that is cautious about heavy industrial development. As a result, many developers who faced roadblocks before are having a tougher time now due to the city’s limited resources stemming from the pandemic.

Read the full article in Texas Real Estate Business’ July 2021 issue.

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