Distribution centers expand to Cy-Fair to meet e-commerce demand
About 100 of Cy-Fair’s more than 500 industrial facilities have opened since early 2016, according to data from Caldwell Cos.
Economics and land experts said Cy-Fair is an important target for warehouses and distribution spaces due to its access to major arteries such as the highway. 290 and Beltway 8 as well as the availability of an open area.
“The land inside Beltway 8 is getting very expensive, and [it is] very difficult to find large tracts of land, and therefore the developers are heading to [the] Grand Parkway, ”said Patrick Jankowski, senior vice president of research for the Greater Houston Partnership.
While several new industrial facilities were recently completed at Cy-Fair, many are still empty. Jankowski said the Houston area’s industrial vacancy rate has been heading “in the wrong direction” in recent years as developers have oversized in response to demand for e-commerce and consumer distribution. Construction began to slow as the prices of building materials increased during the COVID-19 pandemic, he said.
As of mid-July, the industrial vacancy rate at Cy-Fair was 14.4%, more than double what it was four years ago, but additional industrial projects totaling 2.5 million feet squares are expected to be under construction through 2022. National brands such as The Home Depot and Amazon have set their sights on Cy-Fair to meet their distribution needs.
Molto Properties is a developer who sees potential for industrial growth at Cy-Fair. In 2019, it built a 136,651 square foot distribution center west of Huffmeister Road. Molto also plans to open Barker Cypress Distribution Center, a 142,100 square foot facility, in early 2022.
“We look forward to continuing our success in Northwest Houston with this project which provides unique visibility on Highway 290,” Molto Properties Senior Manager Mike Powers said in a statement. “We are pleased with the level of activity, highlighting how strong industrial demand in Northwest Houston has been. “
While these projects create jobs in the community and support the economy, they can also contribute to traffic congestion and air pollution.
Andrea French is Executive Director of the Transportation Advocacy Group Houston, a regional mobility advocacy organization. She said daily commuters have already started to see an increase in traffic beyond traditional peak hour periods as they share the road with more delivery trucks. According to the United States Government Accountability Office, parcel deliveries increased 71% from June 2019 to June 2020.
“That rush hour window is starting to expand, and suddenly your backups are as early as 2 [p.m.] or as late as 10 [p.m.], “she said.” I think we’ve all experienced it where we were like, ‘It’s the middle of the day. What’s going on?’
The increase in online shopping during the COVID-19 pandemic has highlighted Americans’ dependence on logistics operators. Consumers spent $ 861 billion online with U.S. vendors in 2020, up 44% from the previous year, according to market research firm Digital Commerce 360.
While there is some uncertainty about what behaviors will last beyond the pandemic, Jankowski said online shopping will not go away.
This growing trend is translating into more warehouse and transportation jobs across the greater Houston area, but Jankowski said traditional retail jobs are on the decline as fewer people shop in physical stores.
“If you run out of dishwasher soap, why get in the car and go to the store to get the dishwasher soap when you can order it and have it delivered the next morning?” ” he said.
Rachel Alexander, senior vice president of research at commercial real estate company JLL in Houston, said the region’s industrial market had accelerated since before COVID-19 with new tenants entering the market over the past three to three. last five years.
Northwest Houston is the region’s largest industrial submarket, Alexander said, due to the desirability of a range of industrial developments along the freeway. 290 and its main arteries such as Beltway 8, Hwy. 6 and the Grand Parkway.
However, she said, it is common for industrial projects to start up with no tenants in mind, which is why residents may notice the facilities remain empty for several months after construction is complete.
“Houston is not generally a strong market for pre-letting,” Alexander said. “It is not uncommon for a building to be delivered and then to take 12 to 18 months to be rented.
As the market lagged at the start of the pandemic, she said it recovered quickly and Houston had a record quarter for rental activity at the end of the year. That record was broken again in the second quarter of 2021. Alexander said more than 70% of second quarter activity was either from tenants new to the market or from tenants expanding their footprint.
“What’s exciting about Houston is that we don’t have zoning, so just when you think we’ve been pushing the boundaries of the industry, we hear about a new project… because that the demand is so high, and businesses want to be here, ”she said.
This increase in e-commerce activity has put a strain on the region’s transportation system, according to Bill Eisele, senior research engineer and head of the mobility division at the Texas A&M Transportation Institute.
“[Freight transportation] is really the backbone of our economy – being able to keep these goods moving on roads, supply chains and logistics, ”he said at a meeting of the Chamber of Commerce Cy -Fair of Houston in June.
French said that while typical commuters spent less time on the roads during the pandemic, that daily traffic increases again as they return to work in person alongside a growing number of delivery trucks.
Monique Stephens is a Cy-Fair resident and administrator of the “All 290’d Up Traffic Reports” Facebook group, in which she said complaints from local drivers “outweigh positive reviews.” She said she was not happy to hear about the opening of the new distribution center on Barker Cypress Road, given the traffic it will bring along the corridor.
“The traffic is already blocked right now… There must be other routes to get people moving,” she said.
Projects such as the proposed expansion plan for I-45, which is on hold at the time of publication, are critical to keeping up with Houston’s growth and the resulting increase in traffic, French said.
“There must be a great artery for [trucks], and it has to be a safe and reliable artery, otherwise our on-demand shopping and cultivation suddenly stops when we don’t have the things we want or need when we want or need them », French mentioned.
Eisele said some companies are deploying or planning to implement “space age” delivery solutions to make deliveries more efficient. Examples include the Nuro R2 delivery robot used by Domino’s and some grocery chains. Amazon also has several patents on future distribution channels, including underground and submarine warehouses and distribution centers for drones in trains and in hovering airships.
“There’s a really big, global supply chain behind the person who comes in and delivers this package to you. And really, a lot of things have to go right for this package to get there, and most of the time it does, ”he said. “There are huge implications when you click on ‘next day delivery’ or ‘same day delivery’ in particular. … It’s something that will catch up [to] our transportation system at some point.
In addition to transportation complications, Mustapha Beydoun, vice president and chief operating officer of the Houston Advanced Research Center, said distribution centers also raise environmental concerns.
Many of these warehouses are built on open fields, wetlands or forest areas, so green spaces and natural habitats are lost in the process.
Large-scale distribution centers often replace rainfall retention areas with impermeable cover or surfaces that do not absorb rainfall, said Ryan Bare, watershed ecology researcher at HARC. This increases the risk of flooding in neighboring housing estates.
“You have a brighter event as well as a higher volume event that then moves downstream through the watershed due to increased development and impermeable coverage,” Bare said.
Beydoun said heavy diesel trucks traveling between these logistics facilities emit toxic nitrogen oxides and carcinogenic diesel particles. These emissions contribute to poor air quality, which can cause health problems including coughing, asthma, irregular heartbeats and other problems, he said.
“It’s not just the big bad industry, although it’s a problem. It’s those seemingly harmless facilities with heavier trucks, especially when they’re built so quickly and at the scale you see now, ”he said. “These are huge warehouses with dozens and dozens of bays and trucks going in and out 24/7.”
But some companies are working to mitigate these environmental consequences. Best practices include taking advantage of large rooftops to install solar panels, maintaining higher and more energy efficient building standards, replacing diesel trucks with cleaner vehicles, and following county drainage criteria to capture more detention, according to Beydoun.
Earlier this year, FedEx Corp. announced its intention to become carbon neutral by 2040, and UPS has committed to be carbon neutral by 2050. Goals include the phased introduction of electric vehicles, offering more packaging solutions sustainable development and investing in renewable energies.
“The sooner we can start moving forward, the less problem we will have to deal with on the road,” Beydoun said. “You don’t have to go from zero to 100 immediately; there are incremental steps you can take along the way that will greatly benefit these facilities.