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As e-commerce soars, logistics real estate in Texas is hot

Demand for cross-dock warehouses, logistics centers surge across the Lone Star State

Amazon Inc. has announced or opened new fulfillment centers or delivery stations in seven cities across Texas since June. (Photo: Amazon)

Across Texas, distribution centers and logistics facilities are hot commodities, fueled by a surge in online shopping. 

Amazon, FedEx and Lowe’s are three of the companies that have all either opened or announced new distribution and logistics facilities aimed at e-commerce in the Lone Star State since May.

The coronavirus pandemic and shelter-in-place restrictions that followed accelerated e-commerce growth and the need for warehouse space, said Kris Bjorson, head of retail e-commerce distribution in the Americas at Jones Lang LaSalle (JLL) Inc. 

“Pre-COVID, only the top global retailers were truly investing in and focusing on the last mile,” Bjorson said in a release.

JLL is a commercial real estate services company based in Chicago. In response to accelerating e-commerce growth, JLL recently created a task force for real estate and supply chain distribution needs.  

“Now that U.S. consumers have helped e-commerce surge above 20% of total retail sales — a three- to five-year leap forward — we see a tremendous opportunity to help all retailers in a better way, integrated as one team with every area of expertise required today,” Bjorson said.

One of JLL’s most recent projects is the Fort Worth Logistics Center, a speculative industrial development totaling 956,020 square feet in north Texas. JLL arranged a partnership with Invesco Real Estate and Dallas developer Bandera Ventures to build the $30 million project. 

The logistics center, which includes two cross-dock buildings, 231 loading doors and 36- to 40-foot clearance heights, is scheduled to be completed next year.

Amazon Inc. has been on a building boom in Texas since the pandemic started. Since June, Amazon has announced or opened new fulfilment centers or delivery stations in the cities of Buda, El Paso, Forney, Kyle, Fort Worth, Pflugerville and Round Rock.

Amazon’s new fulfillment and sortation centers in Texas could create as many as 2,900 full-time jobs.

Amazon has invested more than $17 billion in the Lone Star State since 2010. That figure includes infrastructure and compensation to its employees, according to the company’s website. Amazon has 20 fulfillment and sortation centers across Texas as well as 12 delivery stations.

The only state Amazon has invested more infrastructure in is California, with more than $50 billion in facilities and jobs. Amazon has about 30 fulfillment and sortation centers across California, as well as 19 delivery stations.

Forney, like Fort Worth, is located in north Texas. El Paso is in far west Texas, while Buda, Kyle, Pflugerville and Round Rock are located in central Texas.

Jason Giulietti, president of the Greater San Marcos Partnership (GSMP), said 2020 has been one of the region’s best years in terms of attracting new companies and jobs. 

Located in San Marcos, the GSMP is an economic development organization that covers most of the central Texas area. The city is located along Interstate 35, just south of Austin and north of San Antonio. It includes the communities of Buda and Kyle.

“The pipeline of new projects that are looking at our region as investments and location opportunities is at an all-time high, both in dollars spent and jobs, and a lot of it is centered around supply chain logistics and distribution,” Giulietti said. 

Giulietti added that the area is already home to about 250 supply chain-related companies that employ 2,500 people.

In 2016, Amazon opened an 855,000-square-foot fulfillment center in San Marcos. At the beginning of October, Amazon opened a 308,000-square-foot sortation facility in Kyle, employing more than 1,000 people.

Amazon also selected Buda for a new 305,000-square-foot delivery station, which will open later this year.

Giulietti said the No. 1 question companies ask him when inquiring about the area is: “Can you provide me the workers I need to execute the function that I want to build or the facility I want in your community?”

He said, “Having Texas State University sitting right there in San Marcos at the center of the corridor doesn’t hurt. We graduate 9,000 students a year, which really helps solidify that workforce conversation.”

Giulietti said that the price of real estate and being located along I-35 are also draws for the area.

Another company opening a last-mile distribution center in central Texas is Lowe’s, which is developing a 120,000-square-foot cross-dock terminal that “will improve last-mile delivery of bulky items like appliances, riding mowers, grills and patio furniture to Lowe’s customers,” company spokesman Steve Salazar said.

“We plan to begin shipping out of the Kyle, Texas, cross-dock delivery terminal in early 2021,” Salazar said. “The 120,000-square-foot facility will enable Lowe’s to provide faster and more predictable deliveries for our customers in Texas as we continue to grow our distribution network. These new facilities will enable next-day deliveries for a broader range of products and give customers a more consistent experience.”

Lowe’s has also opened two other cross-dock delivery terminals in the Houston area.

Lowe’s new facility in Kyle is part of the company’s  $1.7 billion distribution network expansion to transform its supply chain through 2023.

Lowe’s and its third-party partners will create nearly 5,000 jobs to support the initial expansion. With the increase in online shopping during the pandemic, Lowe’s also recently announced it would provide an additional $100 million in bonuses to recognize frontline U.S. hourly associates for their continued service.

“The additional bonus will bring Lowe’s total commitment to associates and communities during the pandemic to more than $775 million,” Salazar said. 

Other major companies opening distribution centers in Texas include FedEx, which leased a 750,000-square-foot facility in Dallas that will be fully operational by the end of the year.

FedEx officials said the site was chosen because of its access to major highways, proximity and customers’ distribution centers.

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact [email protected]