Texas Leads Industrial Growth
Commercial real estate firm JLL just announced the top ten markets for warehouses. Released in late June, the firm linked both industrial real estate and population growth to determine which markets are expected to boom in coming years.
Top Markets for Growth
For the last three years, Houston, Dallas, Inland Empire, outside Los Angeles, and Atlanta have grown their industrial market size by 10%. These are areas where there is still buildable land available for warehouse development. By population growth alone, Houston is expected to outpace all of the top ten markets: The city is projected to grow its population by 11% by 2022.Gillam Campbell, JLL research manager, said the growth possibilities in Texas alone are significant.
“Houston and Dallas are already huge population centers…with so much more growth projected there,” she said. “This makes for great opportunities for new investing. The trend of population migration in the U.S. to Sunbelt areas is really apparent [in Texas].”
The second cluster of markets where warehousing opportunities are ripe are Los Angeles, New Jersey, Seattle, and South Florida, due to their coastal access. However, these areas face challenges — high rents, lack of readily available buildable land — which has slowed inventory growth in recent years. In these areas, developers are expected to get creative by building new multistory warehouses to accommodate demand.
Finally, Chicago and Pennsylvania round out the list where both population and industrial market growth are rising.
Besides Houston, population growth projections for 2022 include: Dallas at 8%; Atlanta at 5.8%; Seattle at 5.2%, Los Angeles at 4.7%, Inland Empire at 4.3%, New Jersey at 4%; South Florida at 3.6%; Eastern and Central Pennsylvania at 3.4%; and Chicago at 2.9%.
What continues to make these markets viable is that they represent, or are near, large population hubs. That’s key as the demand for same- or next-day delivery continues to increase. These industrial real estate markets will continue to valuable, but the challenges developers will face is how to design new warehouses in either repurposed or dense spaces.
How have your warehousing needs changed in recent years? Do you expect to expand your facilities in new markets? Please let us know in the comments below!
Frequently Asked Questions
What factors should investors consider when choosing between Texas and coastal warehouse markets?
Investors should weigh land availability and costs against market access. Texas markets like Houston and Dallas offer abundant buildable land and lower development costs, making them ideal for large-scale facilities. Coastal markets provide superior port access and established logistics networks but require higher investment due to land scarcity and premium real estate prices.
How do multistory warehouses compare to traditional single-story facilities in terms of efficiency?
Multistory warehouses maximize space utilization in land-constrained markets but typically have higher construction and operational costs. They require specialized equipment like freight elevators and may have slower material flow compared to single-story facilities. However, they’re becoming essential in expensive coastal markets where land availability is limited.
What timeline should developers expect for warehouse construction projects in these hot markets?
Construction timelines vary significantly by market conditions and project complexity. In Texas markets with available land, traditional warehouses may take 6-12 months to complete. Coastal markets requiring multistory construction or site remediation can extend timelines to 18-24 months, plus additional time for permitting in densely regulated areas.
Why are same-day delivery requirements driving warehouse location decisions more than before?
E-commerce growth has shifted consumer expectations toward immediate fulfillment, requiring warehouses within 50-100 miles of major population centers. This proximity enables last-mile delivery within hours rather than days. Companies must balance being close enough for rapid delivery while maintaining cost-effective operations and sufficient inventory space.
What are the typical lease rates for warehouse space in these top industrial markets?
Lease rates vary dramatically between markets and facility types. Texas markets generally offer the most competitive rates, while coastal markets command premium pricing due to land scarcity. Rates also depend on factors like ceiling height, dock doors, proximity to transportation hubs, and modern amenities like advanced HVAC and technology infrastructure.
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