Even before the city’s population growth began exploding and its reputation as a tech hub became entrenched, Austin was always a true last-mile market for industrial users. Now that e-commerce has morphed into a worldwide phenomenon with real staying power, Austin looks like one of the next ideal locations for institutional industrial developers to make their marks with larger projects. However, the market does present a handful of challenges, including an intricate entitlement process, expensive land and a slightly higher cost of construction as compared to Texas’ other major markets. These barriers to entry have helped characterize the Austin industrial market we see today, with local developers leading the way. The Austin Market Today From both a developer’s and a broker’s perspective, the biggest advantage of being in a high-barrier-to-entry market, aside from less competition, is that the likelihood of becoming overbuilt is minimized. We saw this in 2008 and 2009, when the recession forced industrial users to cut operating costs and landlords to lower rents. Like the rest of the country, Austin took some hits during the Great Recession and saw a handful of properties foreclosed upon. But due to minimal new development, the market was able to maintain …
