ProLogis Park in Lancaster, Texas, is strategically located in close proximity to intermodal facilities.

The South-Central region of the United States may be known for its wide-open spaces, but many industrial clients there want their new developments to be close to important neighbors such as intermodal yards. Industrial plant and the office/warehouse segments continue to gain momentum throughout the region, mirroring nationwide trends.

According to Industrial Info Resources, industrial plant construction across the United States has increased by 33 percent, up from $60 billion to $88 billion in 2006. Developers operating within the South-Central states of Texas, Louisiana, Arkansas and Oklahoma are taking advantage of this trend, and see strong potential in the segment.

Denver-based ProLogis, one of the region’s leading distribution facility developers, is capitalizing on the South-Central’s substantial growth opportunities. The company has developed more than 447 million square feet of industrial space worldwide, according to Eric Brown, senior vice president and regional director of the central region.

Land availability is an issue in many regions, and Brown says even the Texas market is being hit hard by the lack of prime real estate in the right locations. “There’s a lot of land in Texas, but everything in this business comes down to location, location, location,” he insists.

Many key markets throughout Brown’s central region are lacking properly zoned land. Particularly in its distribution facility projects, location is even more important than ever. In recent years, many ProLogis clients have demanded that facilities be in close proximity to intermodal yards, to take advantage of container traffic.

ProLogis Park
The company is developing ProLogis Park 20/35, a 3.3 million-square-foot master-planned business park in Lancaster, Texas. The park is strategically located to take advantage of Union Pacific’s domestic and international intermodal facilities.

Spaces are offered from 30,000 square feet to 1 million square feet, and each features on site trailer parking. “Many older facilities do not offer on-site parking, but we’re seeing a big trend toward offering this,” Brown says.

“This is important, because as railroad capacity is stretched, there are more and more trucks on the road. Customers have to put those trailers and trucks somewhere.”

In its newer facilities, the company is enhancing maneuverability by creating taller clear-heights, wider truck quarters and additional parking space.

Duke’s Distribution Hub
Jeff Turner, executive vice president of Duke Realty’s southern division, says industrial and distribution projects offer substantial growth opportunities. “Dallas is becoming a major hub for distribution in the area,” he asserts. “Thus, many buildings and users are getting larger and larger.”

Although the company is active in the industrial segment, it also develops corporate offices, medical facilities and retail projects. Duke Realty’s southern division is hard at work with more than 4 million square feet under development, primarily consisting of industrial space.

Get Tilted
In the office space segment, builders are adopting tilt-up design to add value and reduce the cost of a project. “In the traditional class-A mid-rise project, a developer might spend nearly $150 to $250 per square foot to build but, by using tilt-up design, they can lease the space for $4 to $6 less than class-A spaces,” Turner says.

Reducing construction costs is becoming even more important as land prices continue to rise in the South-Central region. As demand grows, Turner sees many developers moving further outside urban areas to find cheaper land.

“When the prime sites get taken up, the remaining sites that are the most ideal become even higher in price,” he explains. “We’ve been finding ourselves moving further out to the suburbs to find available land.”

However, Turner says, suburban facilities have proven to be in high demand, as well. “Many people prefer living outside the city, where it’s less congested,” he says. “We’re trying to follow the population growth, so we enjoy developing in the suburbs where many people are currently migrating.”

Duke Realty is developing a 1 million-square-foot facility just outside Dallas. According to Turner, the company ensured that the building had “all the bells and whistles” that potential tenants are searching for. “It has a 32-foot clear-height, trailer storage, and it’s also visible from the major freeway nearby,” he says. “It’s strategically located in close proximity to rail service, which is also a big draw.”

Green Scene
As many companies continue to gradually adopt green building practices, Brown insists sustainable development is “more than just a trend.”

Increasing numbers of clients are demanding that their projects are built in an environmentally responsible way. Sustainable building objectives are not just part of a passing fad; they are becoming the building standards of the future, Brown says.

In fact, he predicts that regulatory agencies will become increasingly involved in green building initiatives in the future. “I see [sustainable building] becoming less of a suggestion and more of a requirement in the future,” Brown asserts. “Some developers do not understand that this is not just a trend, it’s the reality of each project.”

Brown’s prediction may come to light faster than many realize. According to the U.S. Green Building Council Central Texas chapter, the city of San Antonio passed a resolution this year requiring that new city-owned buildings must attain LEED Silver certification.