Texas emerges as a leader in warehousing, tech, and logistics, attracting significant development.
Industrial real estate thrives, with COVID accelerating growth, but developers lag 18 months behind demand.
Joe Santaularia, president-elect of CORFAC International discusses the state’s real estate dynamics and growth potential.
There’s been a massive influx of people moving from places like Chicago, New York, and California to Texas… This is translating into around 20 million square feet of absorption per year, which is a number many markets only see during their best years.
An often afterthought compared to major hubs in New York, Chicago, and California, the post-pandemic dust-settling has left Texas firmly established as a leader in warehousing, tech, and logistics. As Texas carves a name for itself as a chosen hub for production and tech, the state has to grapple with the challenges that come with an influx of development.
To better understand the nuances of real estate, logistics, industrial and beyond, we spoke with Joe Santaularia, Vice President/Managing Partner and President-elect of Bradford – CORFAC International, who shared his insights on the Texas market and where its greatest potential lies.
Feast and famine: Santaularia first sets the scene in terms of real estate, a foundational area of growth, particularly in Texas. “High-level real estate really boils down to three food groups: industrial, office, and retail,” Santaularia begins. “Retail was hammered in 2018 and 2019 due to e-commerce, and then hammered again in 2020 due to COVID. But now, it’s back to normal strength, doing great. Office space was the darling asset up until about 2016, but it started wavering and then COVID hit. Fortunately, tenants were on long-term leases, so the impact was spread over seven years, and we’re almost through that now.”
Santaularia points out that the market can be like a “tale of two cities”. “In some areas, assets are performing amazingly well. If you have an office asset on the toll road in Dallas and it isn’t 95% leased, the problem lies with your real estate provider. But if you have an office in places like Las Colinas or downtown Dallas, you’ve bought the wrong building. That’s where the pain is.”
Industrial has been on a tear, but since the pandemic, the market has bifurcated. Amazon leased 33% of the industrial space nationwide between 2020 and 2022, but they’ve pulled the parking brake since then. Developers are about 18 months behind on demand, which has created some imbalance.
On the tear: Turning to industrial real estate, Santaularia sees the sector as having been on fire for the past 15 years, with COVID accelerating its growth. “Industrial has been on a tear, but since the pandemic, the market has bifurcated. Amazon leased 33% of the industrial space nationwide between 2020 and 2022, but they’ve pulled the parking brake since then. Developers are about 18 months behind on demand, which has created some imbalance.”
20 million sq. ft.: Santaularia also highlights the role of immigration in fueling growth in Texas. “There’s been a massive influx of people moving from places like Chicago, New York, and California to Texas. I’ve heard as many as 500 people a day are moving into Dallas alone. This is translating into around 20 million square feet of absorption per year, which is a number many markets only see during their best years.”
Major hubs:The movement of people into Texas is not just increasing the labor force but also fueling the state’s diverse economic and production sectors. “Dallas, Houston, and Austin are pretty diversified,” Santaularia explains. “Austin is seeing a lot of tech growth, Houston is becoming a hub for heavy manufacturing, and Dallas is attracting logistics and professional services. This diversity means there’s little cannibalization between the cities, and the economic growth is more sustainable.”
