One of Largest Single-Owner Industrial Parks Completes Final Phase

HOUSTON—Bay Area Business Park, a 3.3 million-square-foot class-A industrial development located near Port Houston, was recently completed by Stream Realty Partners, representing the final phase of the development. Owned by Principal Real Estate Investors, all three phases combined make Bay Area Business Park one of the largest single-owner industrial parks in Houston at 3.3 million square feet on 232 acres.

“It is hard to believe we started this vision 13 years ago after extensive market research indicated there was demand for bulk warehouse space near the Port,” said Casey Miller, managing director at Principal. “Even though we are fully built out, our intention is to hold this irreplaceable real estate whose location just gets better year over year.”

In 2007, Principal and Stream broke ground on the original 137 acres with the intention of building a few speculative buildings in multiple phases. Phase one was 1.2 million square feet across three buildings and delivered in 2008. Phase two was 850,000 square feet across four buildings and delivered in 2016. Principal purchased an additional 95 acres in 2019 to include a third phase of the project. Phase three consists of three buildings totaling 1.3 million square feet.

“Working with Principal on BABP has been a labor of love for the last 13 years and it is very fulfilling to have seen this project evolve from a conceptual plan to one of the most successful development projects in Houston,” said Justin Robinson, partner at Stream. “We are very pleased with everything we have accomplished to date and continue to be focused on serving the existing customers in the park, including getting buildings 8 and 10 in the latest phase leased.”

Robinson says the completion timing was fortuitous due to the e-commerce surge associated with the pandemic.

“We have certainly seen an uptick in e-commerce related user demand since we started COVID, specifically, home furnishing companies and other groups that rely on importing items through Port Houston,” Robinson tells GlobeSt.com. “We’re the logical destination for those warehouses given proximity to both the Barbour’s Cut and Bayport container terminals. The class-A nature of the park, ability to fence and secure each building, and above-standard amounts of auto and trailer parking have been very attractive to these types of groups as well.”

Since 2007, Stream has overseen the development, leasing and property management of Bay Area Business Park. Buildings 8 and 10 can accommodate users from 20,000 square feet to more than 1 million square feet while providing a variety of amenities. Additionally, building 10 enables further tenant customization with potential for 10 acres for outside storage, dense automobile parking or a trailer/container yard. As with the prior phases, phase three will be part of Foreign Trade Zone #84 with an anticipated LEED certification.

The offering at Bay Area Business Park enables Stream to cast a wide net across a variety of tenants, thereby catering to tenant demand in whatever form it may take, says Jeff Pate, vice president at Stream.

“Additionally, with the temporary reduction in export container traffic resulting from COVID-related supply chain disruptions, we are also seeing an increased demand in Port-related storage requirements as facilitated by third-party logistics companies,” Pate tells GlobeSt.com. “Well-located facilities with first-class amenities in near proximity to the aforementioned container terminals such as Bay Area Business Park are in a unique position to capitalize on increased storage traffic during this period.”

As of second quarter, Houston’s average industrial vacancy rate increased 40 basis points quarter-over-quarter to 8.1%, which also represented an increase of 190 basis points year-over-year, according to a report by NAI Partners. At the end of the second quarter, Houston had 47.6 million square feet of vacant industrial space for direct lease and an additional 2 million square feet of vacant sublease space. Quarterly net absorption was at 2.3 million square feet, down 32.9% compared to first quarter 2020, and down 16.5% from second quarter 2019.

The record-breaking levels of new construction have contributed to the increase in the vacancy rate, with 8.8 million square feet of available space delivered to the market so far in 2020 or about 60% of the total 14.8 million square feet completed. The vacancy rate for class-A properties is at 16.6%, up from 10.4% this time last year. The overall monthly average asking triple-net rent is up $0.64 per square feet compared to this time last year at $0.61, due primarily to the new product delivered to the market, says NAI Partners.