HPI Real Estate Services and Investments partner Andy Thomas said more than a decade after purchasing the land for Hays Commerce Center that the 100-acre mixed-use park in Kyle has been "exactly what we envisioned." That's because the initial three phases attracted big-box users like FedEx Corp., Alsco Inc., Athlete Performance Solutions and RedBird Flight Simulations Inc.
Now, the Austin-based commercial real estate firm is prepping to fill out the park with what was originally envisioned. The developer plans to break ground in August on two speculative shallow-bay industrial buildings totaling 120,000 square feet. The buildings will be completed within a year. The goal is to add to those large-scale tenants by providing space that serves the booming local Kyle community, whether it's restaurant groups, homebuilding or home improvement suppliers and local entrepreneurs.
"As everybody can see, the market is over-supplied with big box industrial. But it's undersupplied for shallow-bay – shallow-bay meaning buildings that are under 60,000 or 70,000 square feet, catering to tenants with size range from 5,000 to 12,000 square feet," Thomas said.
A June 1 filing with the Texas Department of Licensing and Regulation pegged the investment in the new buildings at $19.2 million. Austin-based Studio8 Architects is listed as the design firm.
HPI leadership said the expansion will push the Hays Commerce Center to 1 million square feet of industrial space total. The move comes as HPI continues to invest in the I-35 corridor between Austin and San Antonio that has been among the fastest-growing regions in the country. The company also recently purchased 25 acres in Schertz but has not yet specified what it plans to do at the site next to an Amazon.com Inc. distribution facility.
HPI Partner Davis Bass, who handles Hays Commerce Center leasing along with Brooks Benkendorfer and Will Thomas, said they're extremely bullish on Kyle – the city of nearly 70,000 people that is 20 miles south of Austin – because of its general business-friendly reputation and housing boom. He said Hays Commerce Center has been able to succeed because of its great exposure and direct access to transportation thoroughfares.
"When we got down there, there was no retail, there was nothing. I don't even think ACC was there," Bass said.
Ironically, this phase is a return to the plans for Hays Commerce Center. The company initially envisioned the 100-acre mixed-use development as more of a shallow-bay product. But the interest from larger companies prompted developers to prep two phases for big-box uses on land HPI either built and leased or made shovel-ready and sold. The site is fully leased and still has room to grow with about 100,000 square feet of additional industrial space and roughly a half-dozen retail pads.
Data from Houston-based Partners Real Estate shows the vacancy rate for flex industrial space in Hays County was 19.9% as of the first quarter. That was below the market-wide rate of 14.3%.
"This was the original vision. We thought, as a whole, differently and did the larger logistics building, which was great, but originally it was going to be local contractor type tenants," Bass said. "We think that Kyle has got enough space to service a lot of their large employers."
In terms of challenges, Bass said HPI has contended with fluctuating market conditions and delivered buildings during the coronavirus pandemic, which led to supply chain disruptions and increases on construction and materials costs. But he credited the city of Kyle for being a "wonderful partner" to help the developer through it.
"Any challenge we met, the city really was our partner and met us and helped us usher it through whether it was inspectors or coming out and meeting prospects with us," Bass said.