Warehouse surge

Austin booms among hottest markets for industrial construction in new report

Austin booms among hottest markets for industrial construction

Commercial building construction
Austin is the No. 3 market in the Southwest for under-construction warehouse and distribution centers. Getty Images

It's not just Austin's residential real estate market that's hot. Austin is among the hottest markets in the Southwest for under-construction warehouse and distribution centers.

Data published by Community Property Executive shows Austin had nearly 8.3 million square feet of industrial space under construction in late June. That represents a little over 7 percent of the existing industrial space (more than 114 million square feet) in the region. 

Austin ranks third in the Southwest, behind Dallas and Houston, according to Commercial Property Executive, at Nos. 1 and 2, respectively. Dallas is also the No. 1 market in the U.S., beating out Phoenix (No. 2) and Southern California's Inland Empire (No. 3) nationally.

In Austin and throughout the country, the meteoric rise of e-commerce is the main driver of industrial construction. In May, the average vacancy rate for industrial space in the U.S. sat at a rock-bottom 4.7 percent, Commercial Property Executive says.

“Although the COVID-19 pandemic brought on new challenges for the industrial market, with port congestion, materials shortages, and commodity pricing skyrocketing, the market has and will continue to excel,” commercial real estate services company Cushman & Wakefield says in a recent report.

Elsewhere in Texas, 21.2 million square feet of industrial space was under construction in the Houston area at the end of June, Commercial Property Executive says. The same figure was more than 5.7 million for the El Paso area, and almost 4 million for the San Antonio area.