Industrial developers dealing with steep land prices around the Grand Parkway
With demand for industrial space in Houston stronger than ever and developers seeing a scarcity of available land, industrial developers are paying more for Houston land than they’ve ever had to, brokers with Houston-based Dosch Marshall Real Estate, a land brokerage firm, told the Houston Business Journal.
In some cases, industrial developers are paying twice as much for a tract of land – sometimes up to $6 per square foot in areas around the Grand Parkway – than they’ve historically had to pay to compete with other kinds of developers in Houston, said Tim Dosch, a principal at Dosch Marshall.
“They’re seeing that they have to go and put their stake in the ground now, because there’s so many apartment developments being announced,” said Tom Dosch, principal at Dosch Marshall, referring to industrial developers and institutional owners. “They’re not going to be able to compete on price if they don’t go get their sites now. We’re seeing them pay numbers that industrial (developers) have never really paid for that type of land.”
In part, that’s why large institutional buyers and industrial REITs have remained competitive in buying land around Houston’s suburban core.
Players like Canada-based Artis REIT, which acquired land in Houston this spring that’ll be developed into a 519,224-square-foot industrial project, are well-capitalized to compete with developers of vertical projects, such as apartment complexes, which can generate more revenue per square foot over time.
Another out-of-state player that’s been busy in Houston is Indianapolis-based Duke Realty Corp. (NYSE: DRE), which recently bought 77.9 acres at Clay Road and State Highway 99 from Houston-based Landmark Industries. That land was part of a 103-acre tract formerly owned by Chevron Corp. (NYSE: CVX). Dosch Marshall has an industrial project under contract near the Duke Realty site, Tom Dosch said.
“Initially, industrial guys felt like that was a little far out,” he said of land along the Grand Parkway “They’re (realizing that they’re) not going to be able to compete on price if they don’t go get their sites now.”
Dosch Marshall launched in 2017 when Tim Dosch, David Marshall and Tom Dosch left ARA Newmark. The land team was with ARA Newmark for a decade, where they brokered more than 200 land transactions worth more than $1.1 billion.
Dosch Marshall’s recent revenues weren’t disclosed, but Tom Dosch said the team is on-track to end 2018 with double the team’s revenue in 2014, which was its biggest year ever.
Houston Business Journal