A&R Logistics Expands Export Packaging

November 09, 2020

Home Depot Expands Industrial Footprint in Northwest Houston

By Marissa Luck
CoStar News

Oct 7, 2020 | 2:15 P.M.

Construction is underway on Home Depot’s 657,000-square-foot distribution center in Northwest Houston as the company continues to ramp up its industrial footprint near major growing population hubs.

The home improvement chain’s latest Houston rapid deployment center is at 11333 N. Gessner Road off of Highway 249 in the Willowbrook area. The distribution center is under development in the same 160-acre business park called Republic Business Park where a new 141,360-square-foot delivery station likely for Amazon is underway by National Property Holdings.

General contractor Arch-Con is expected to start ground-up construction in November, and infrastructure and drainage work is already underway, including construction of a detention pond, according to National Property Holdings. Construction of the facility is expected to be complete in 2021, according to state filings.

Home Depot’s new Northwest Houston distribution center is part of the company’s “strategic investment in our supply chain network to offer same day/next day delivery to 90% of the United States,” a Home Depot spokeswoman said in an email to CoStar News. The center is about 2 miles away from an existing Home Depot warehouse.

Home Depot is three years into a $1.2 billion plan to transform its supply chain by adding 150 new industrial facilities. In August, the Atlanta-based home improvement retailer announced three new distribution centers in Georgia that would create 1,000 jobs.

The pandemic has accelerated supply chain transformations for both Home Depot and competitor Lowe’s as more Americans turn to home improvement projects to stay busy during the pandemic.

Home Depot’s same-store sales shot up 23.5% in the second quarter and net sales hit $38 billion, a 23% increase, according to its most recent earnings. Online sales doubled in the second quarter, and about 60% of e-commerce customers chose to pick up their items in the store, CEO Craig Menear told investors during an Aug. 18 earnings call.

The surge in online sales created new challenges for fulfilling orders, pushing the retailer to convert at least one so-called market delivery center into a direct fulfillment center to handle online orders only, Menear said.

Market delivery centers typically handle large bulky items for local markets, whereas direct fulfillment centers are typically above 700,000 square feet and use automation and mechanization to more quickly sort through parcels, Stephanie Smith, Home Depot’s senior vice president of supply chain, told retail industry group the National Retail Federation. Smith added that it took three weeks to convert the market delivery center to a direct fulfillment center in Chicago.

Rapid deployment centers tend to help support Home Depot’s existing retail stores and aren’t only for fulfilling online sales, said Ryan Lovell, vice president of development at National Property Holdings, the developer behind the new Houston center.

Lovell said the location of the center will allow Home Depot to further respond to rising rooftop growth in Northwest Houston area.

“That’s the population center for Houston so from a distribution standpoint, there is always a need, people want to be west and northwest,” Lovell said.

Home Depot declined to say how many jobs the center will support. However, a similar warehouse recently announced in Georgia is expected to create 600 jobs, according to the company.

Home Depot has been gobbling up more industrial space Houston in recent years, notably with the signing in 2019 of a 20-year lease with Hines for a 770,640-square-foot warehouse at the Grand National Business Park.

Even during the pandemic, Home Depot is still inking leases in the Bayou City beyond the new National Property Holding development.

“Like Amazon, Home Depot is a group that is absolutely in a major expansion mode similar to Lowe’s and I think we’re going to see even more Walmart business. These are the household names that are driving a lot of demand and will drive it going forward,” said Justin Bennett, regional partner with developer Phelan Development Co., which was not involved with Home Depot’s recent lease at Republic Business Park.

Home Depot and Lowe’s have been looking for more space in Houston and throughout Texas and other Sun Belt states. In Houston, users like Amazon and Home Depot typically are taking build-to-suit space rather than speculative space, Bennett noted.

October 7, 2020

Amazon’s Latest Distribution Center in Houston Hits the Market

By Marissa Luck
CoStar News

Oct 2, 2020 | 2:08 P.M.

Amazon’s latest industrial property in the Houston area opened this week, and the e-commerce’s new digs have already hit the market.

Amazon’s 805,601-square-foot sortation center is located at 22525 Clay Road in Katy near Grand Parkway, north of Interstate 10 and about 31 miles west of downtown Houston.

Called Amazon Clay 99 Sort Center, the new facility is about 13 miles west of Amazon’s existing 1 million-square-foot fulfillment center in Brookshire at 31819 Highway 90 E and about 30 miles southwest of where Amazon opened its first Houston fulfillment center in 2017 at 10550 Ella Blvd. in Pinto Business Park.

With the Clay Road center, along with other leases and new delivery stations planned, Amazon’s industrial footprint in Houston is on track to hit at least about 4.2 million square feet by next year, or the equivalent of about 74 football fields worth of space, according to CoStar News.

The accelerated adoption of e-commerce in the COVID-19 era has made industrial space in high demand across the country, a stark contrast to that of the broader commercial real estate industry, which has generally come to a standstill since the pandemic hit.

Amazon’s new Houston sortation center opened Sept. 30, and the company has already hired several workers, according to an Amazon spokesman. Hiring is expected to ramp up in the coming weeks and ultimately hit 3,000 full- and part-time workers, the spokesman said in a phone call.

The associates at the sortation center are expected to sort customer orders by final destination and consolidate them onto trucks for faster delivery, including Sunday delivery, according to Amazon’s website. The Clay 99 Sort Center is a smaller footprint than the Brookshire fulfillment center, which is a more traditional warehouse that handles bigger and bulkier items, the spokesman said.

The Clay 99 facility was a build-to-suit project by Duke Realty, the same developers behind Amazon’s Brookshire fulfillment center. Amazon’s Pinto Business Park facility was developed by Seefried Industrial and was bought by USAA.

Even before Amazon started operations at the Clay 99 facility, Duke Realty had been marketing the building for sale since early September, according to marketing materials for the property obtained by CoStar News.

A spokeswoman for Duke Realty said the property has generated interest, and a deal is expected to close “soon.” JLL’s capital market’s team of Trent Agnew, Rusty Tamlyn, Charlie Strauss, Dustin Volz and Stephen Bailey are involved in marketing the building for sale on behalf of Duke Realty.

Duke Realty broke ground on the build-to-suit project in the first quarter of this year, according to CoStar data. Amazon has inked a 10-year lease with 2.5% annual rent increases, according to the marketing materials. The tenant has invested $16.5 million into its own tenant improvements, the materials said.

The 53-acre property is part of the Clay 99 business park, which Duke Realty has been developing since it acquired the land in 2018. The park includes two buildings totaling 1.23 million square feet of space, a Duke Realty spokeswoman said. Construction on a speculative 433,300-square-foot building is complete, and Duke Realty has hired CBRE’s Faron Wiley, Billy Gold and Tom Lynch to lease the building, the spokeswoman said.

Earlier in the pandemic, Duke Realty paused its speculative developments to focus on build-to-suit opportunities.

Separately, Amazon is also rolling out additional delivery stations in the Houston area.

The e-commerce retailer this week opened a200,000-square-foot delivery station at SouthPoint Business Park, an 87-acre, multitenant development near the crossroads of Beltway 8 and Highway 288, according to the park’s developer, National Property Holdings.

Ryan Lovell, vice president of real estate and development at National Property Holdings, said in a phone interview that the new Amazon delivery station is called DHX1 and opened Sept. 30.

National Property Holdings is also the developer behind a 141,360-square-foot delivery station being built on Gessner Road under the name “Delivery Station DHO8,” according to a state permit. Lovell declined to confirm if the building has a tenant, however, the project’s design and name is similar to other Amazon delivery stations.

The facility is designed for a package delivery service and was estimated to cost at least $25 million to build, according to the permit. Construction is expected to start this month with an estimated completion date of October 2021.

The “DHO” nomenclature is the same one Amazon uses to describe its various last-mile distribution centers in the Houston area. Amazon currently has several delivery stations with“DHO” in the facility name. The e-commerce company has also used “HOU” and “DHX” to describe its Houston-area industrial facilities.

DHO8 is planned for 11311 N. Gessner Road, just half a mile away from an existing Amazon Flex Warehouse called DHO1, which is located at 11720 N. Gessner Road. Amazon leases roughly 100,000 square feet at the DHO1 location, according to CoStar records.

An Amazon spokesman declined to comment on the DHO8 building and said the e-commerce firm doesn’t speculate on rumors or speculation.

Meanwhile, Trammell Crow is also developing another 850,000 square-foot distribution center leased to Amazon that is about 27 miles from downtown Houston in Richmond, Texas, expected to open in 2021 and support 1,000 jobs.

Earlier this year, Amazon also signed a 443,520-square-foot warehouse lease in Northwest Houston at Park 249.

October 2, 2020

Community Involvement

National Property Holdings is pleased to be a part of driving new industry by spurring economic growth and development in Texas, Louisiana and the Gulf Coast Region...

October 7, 2020

Community Involvement

SERVICES

PROJECT DEVELOPMENT

CONSTRUCTION MANAGEMENT

LEASING & PROPERTY MANAGEMENT