Why an Austin developer is chasing Houston’s manufacturing moment

An Austin developer has acquired a 50-acre industrial campus in northwest Houston, aiming to tap into growing demand from advanced manufacturers expanding in the region.

PlaceMKR, a real estate investment and development firm founded in 2018, on Wednesday announced that it has acquired Rankin Yards, an industrial property at 1310 Rankin in north Houston. The 50-acre campus includes more than 17 buildings, 32 cranes and a 40-megawatt power substation. The campus covers more than 600,000 square feet of rentable space, and enclosing existing open-air craneways will add about 100,000 square feet, PlaceMKR said. 

PlaceMKR said in a release that the property was acquired from Wellbore Integrity Solutions, which will remain as a tenant on the campus. The terms of the deal were not disclosed. 

Jesse Weber, PlaceMKR co-founder, said in an interview that the firm had been looking for properties in Houston after identifying the region as an area of interest given its access to a major port and skilled manufacturing labor force as well as the existence of “second-gen properties” — buildings previously occupied by another tenant — already equipped with expensive power infrastructure.

“You can’t find second gen crane-served space in Austin,” he said. “There’s a large vacancy in Austin, and, you know — Samsung, Tesla, economies and environments that are pushing towards advanced manufacturing, but you can’t go and find a second gen space that has cranes.”

He added: “If we could do this exact archetype over and over, this would be our perfect advanced manufacturing business.” 

ECONOMY: Why Houston’s economy is doing better than you think, despite rising inflation and Iran war

PlaceMKR’s acquisition comes as Houston’s advanced manufacturing sector is poised for growth from new investments tied to artificial intelligence and electronics manufacturing, such as projects from Foxconn supporting Apple and Nvidia.

Those new AI-related projects add to demand from existing manufacturers in Houston’s energy, petrochemical and port-related export industries, said Mary Doetterl, research director at Lee & Associates, who was not involved with the PlaceMKR deal but closely tracks the market.

Vacancy rates across the manufacturing industrial real estate sector in Houston sit at about 2.5%, according to a first quarter report from real estate firm Partners, compared to 7.5% for industrial real estate overall.

Austin Dabbs, director at Lee and Associates, said he’s seeing manufacturers from Italy, Germany, Belgium, China and India looking to establish a U.S. presence to avoid supply chain disruptions.

“Right now, the name of the game in the manufacturing space is reshoring,” Dabbs said. “That’s not a brand-new idea, but it is really starting to happen now.” 

Although some larger distribution buildings can be repurposed for certain manufacturers, there is still demand for specialized buildings already equipped with cranes, or with the capacity to accommodate one. Some developers have taken note and are working to bring more of this specialized manufacturing space to Houston.

“A lot of that is driven by the demand for crane-served buildings,” Dabbs said.

MANUFACTURING: At Apple and Nvidia plants, Foxconn bets Houston can train America’s AI workforce

About 30% of new business announcements in Houston last year were tied to manufacturing, according to the Greater Houston Partnership.

“I would correlate it very much to what occurred in life science,” Weber said. “You have San Francisco and Boston, where you have this existing wet lab product, and it continues to mature those biotech industries, because new startups can go and take second-gen space.”

“That’s what’s happening, in a way, with crane-served space and heavy power in Houston,” he continued. “You have the products and you have the assets, on site, available across the metropolitan area. You also have the workforce. It’s like a perfect culmination of the three major pieces of advanced manufacturing.”