Houston's industrial development has grown, and a contributing factor is the rise of e-commerce activity. Getty Images

With retail e-commerce sales in the U.S. projected to soar from $501 billion in 2018 to $740 billion in 2023, it's no wonder that Houston's industrial market is expanding faster than Santa's bag of toys.

E-commerce is one of the main drivers of an upturn in industrial construction in the Houston area. Estimates from four commercial real estate services companies show that during the third quarter, anywhere from 13.3 million square feet to 18.5 million square feet of industrial space was under construction in the region. That volume is up considerably from the second quarter of 2019 and from the same period in 2018.

Around the country, the "need for speed and choice" to appease shoppers is driving a lot of the increased demand for industrial space, Hamid Moghadam, chairman and CEO of industrial REIT Prologis, recently told Wall Street analysts. That, he said, is because "the more choices you want and the quicker you want them, the more inventory you need to position near the customers."

Rob Stillwell, executive managing director in the Houston office of commercial real estate services company Newmark Knight Frank, says many of the local industrial facilities geared toward e-commerce are being built in and around pockets of residential growth. This includes a swath from I-10 West in Katy to I-45 North toward The Woodlands. Among the facilities popping up in that corridor are massive projects for Amazon, FedEx, and UPS, according to Stilwell.

"E-commerce is likely a contributing factor to many distribution operations in Houston, but not the sole reason for the strong demand seen in the market," Stilwell says. Many new or expanding industrial tenants in the market do have an e-commerce component, he adds, yet won't be leasing space just for e-commerce purposes.

In Houston, e-commerce-fueled construction of industrial space is especially prevalent near George Bush Intercontinental Airport, according to commercial real estate services company Cushman & Wakefield. However, Houston's northwest submarket is seeing the most industrial construction in the area, with 5.5 million square feet underway in the third quarter.

Commercial real estate services company JLL pegs the southeast submarket as the hottest, with its third-quarter report showing 3.5 million square feet of new industrial projects underway there.

Aside from e-commerce, the Port of Houston and the petrochemical sector are propelling industrial construction in the area, Cushman & Wakefield says.

Around the Houston area, nine of the 89 industrial spaces under construction in the third quarter exceeded 500,000 square feet, Cushman & Wakefield says. Several of those lack a specific e-commerce element. This includes a 1 million-million-square-foot manufacturing facility for Coca-Cola, a more than 770,000-square-foot distribution center for Home Depot, and a nearly 550,000-square-foot distribution center for Costco.

Cushman & Wakefield warns that Houston's industrial market could suffer from an oversupply of space, as well as from a drop in shipping activity prompted by ongoing trade disputes and a decline in oil prices. Although industrial vacancy is expected to rise slightly through 2021, the company says, "demand continues for more modern, state-of-the-art facilities and market fundamentals remain healthy."

During the third quarter, only one-fourth of the space under construction in the Houston area was preleased, according to commercial real estate services company Colliers International. However, another 10 percent to 25 percent of that inventory should be preleased before the facilities are completed, the company says.

The area's industrial vacancy rate rose to 7.7 percent in the third quarter as new projects came online, Cushman & Wakefield says. Once more supply arrives, the vacancy rate is expected to tick up.

"Low interest rates and robust investor demand are expected to continue generating strong interest for Houston industrial assets. On the fundamentals side, the market is closely watching new inventory additions," JLL says.

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Houston engineers develop breakthrough device to advance spinal cord treatment

future of health

A team of Rice University engineers has developed an implantable probe over a hundred times smaller than the width of a hair that aims to help develop better treatments for spinal cord disease and injury.

Detailed in a recent study published in Cell Reports, the probe or sensor, known as spinalNET, is used to explore how neurons in the spinal cord process sensation and control movement, according to a statement from Rice. The research was supported by the National Institutes of Health, Rice, the California-based Salk Institute for Biological Studies, and the philanthropic Mary K. Chapman Foundation based in Oklahoma.

The soft and flexible sensor was used to record neuronal activity in freely moving mice with high resolution for multiple days. Historically, tracking this level of activity has been difficult for researchers because the spinal cord and its neurons move so much during normal activity, according to the team.

“We developed a tiny sensor, spinalNET, that records the electrical activity of spinal neurons as the subject performs normal activity without any restraint,” Yu Wu, a research scientist at Rice and lead author of the study said in a statement. “Being able to extract such knowledge is a first but important step to develop cures for millions of people suffering from spinal cord diseases.”

The team says that before now the spinal cord has been considered a "black box." But the device has already helped the team uncover new findings about the body's rhythmic motor patterns, which drive walking, breathing and chewing.

Lan Luan (from left), Yu Wu, and Chong Xie are working on the breakthrough device. Photo by Jeff Fitlow/Rice University

"Some (spinal neurons) are strongly correlated with leg movement, but surprisingly, a lot of neurons have no obvious correlation with movement,” Wu said in the statement. “This indicates that the spinal circuit controlling rhythmic movement is more complicated than we thought.”

The team said they hope to explore these findings further and aim to use the technology for additional medical purposes.

“In addition to scientific insight, we believe that as the technology evolves, it has great potential as a medical device for people with spinal cord neurological disorders and injury,” Lan Luan, an associate professor of electrical and computer engineering at Rice and a corresponding author on the study, added in the statement.

Rice researchers have developed several implantable, minimally invasive devices to address health and mental health issues.

In the spring, the university announced that the United States Department of Defense had awarded a four-year, $7.8 million grant to the Texas Heart Institute and a Rice team led by co-investigator Yaxin Wang to continue to break ground on a novel left ventricular assist device (LVAD) that could be an alternative to current devices that prevent heart transplantation.

That same month, the university shared news that Professor Jacob Robinson had published findings on minimally invasive bioelectronics for treating psychiatric conditions. The 9-millimeter device can deliver precise and programmable stimulation to the brain to help treat depression, obsessive-compulsive disorder and post-traumatic stress disorder.

Houston clean hydrogen startup to pilot tech with O&G co.

stay gold

Gold H2, a Houston-based producer of clean hydrogen, is teaming up with a major U.S.-based oil and gas company as the first step in launching a 12-month series of pilot projects.

The tentative agreement with the unnamed oil and gas company kicks off the availability of the startup’s Black 2 Gold microbial technology. The technology underpins the startup’s biotech process for converting crude oil into proprietary Gold Hydrogen.

The cleantech startup plans to sign up several oil and gas companies for the pilot program. Gold H2 says it’s been in discussions with companies in North America, Latin America, India, Eastern Europe and the Middle East.

The pilot program is aimed at demonstrating how Gold H2’s technology can transform old oil wells into hydrogen-generating assets. Gold H2, a spinout of Houston-based biotech company Cemvita, says the technology is capable of producing hydrogen that’s cheaper and cleaner than ever before.

“This business model will reshape the traditional oil and gas industry landscape by further accelerating the clean energy transition and creating new economic opportunities in areas that were previously dismissed as unviable,” Gold H2 says in a news release.

The start of the Black 2 Gold demonstrations follows the recent hiring of oil and gas industry veteran Prabhdeep Singh Sekhon as CEO.

“With the proliferation of AI, growth of data centers, and a national boom in industrial manufacturing underway, affordable … carbon-free energy is more paramount than ever,” says Rayyan Islam, co-founder and general partner at venture capital firm 8090 Industries, an investor in Gold H2. “We’re investing in Gold H2, as we know they’ll play a pivotal role in unleashing a new dawn for energy abundance in partnership with the oil industry.”

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This article originally ran on EnergyCapital.

3 Houston innovators to know this week

who's who

Editor's note: Every week, I introduce you to a handful of Houston innovators to know recently making headlines with news of innovative technology, investment activity, and more. This week's batch includes an e-commerce startup founder, an industrial biologist, and a cellular scientist.

Omair Tariq, co-founder and CEO of Cart.com

Omair Tariq of Cart.com joins the Houston Innovators Podcast to share his confidence in Houston as the right place to scale his unicorn. Photo via Cart.com

Houston-based Cart.com, which operates a multichannel commerce platform, has secured $105 million in debt refinancing from investment manager BlackRock.

The debt refinancing follows a recent $25 million series C extension round, bringing Cart.com’s series C total to $85 million. The scaleup’s valuation now stands at $1.2 billion, making it one of the few $1 billion-plus “unicorns” in the Houston area.

Cart.com was co-founded by CEO Omair Tariq in October 2020. Read more.

Nádia Skorupa Parachin, vice president of industrial biotechnology at Cemvita

Nádia Skorupa Parachin joined Cemvita as vice president of industrial biotechnology. Photo courtesy of Cemvita

Houston-based biotech company Cemvita recently tapped two executives to help commercialize its sustainable fuel made from carbon waste.

Nádia Skorupa Parachin came aboard as vice president of industrial biotechnology, and Phil Garcia was promoted to vice president of commercialization.

Parachin most recently oversaw several projects at Boston-based biotech company Ginkjo Bioworks. She previously co-founded Brazilian biotech startup Integra Bioprocessos. Read more.

Han Xiao, associate professor of chemistry at Rice University

The funds were awarded to Han Xiao, a chemist at Rice University.

A Rice University chemist has landed a $2 million grant from the National Institute of Health for his work that aims to reprogram the genetic code and explore the role certain cells play in causing diseases like cancer and neurological disorders.

The funds were awarded to Han Xiao, the Norman Hackerman-Welch Young Investigator, associate professor of chemistry, from the NIH's Maximizing Investigators’ Research Award (MIRA) program, which supports medically focused laboratories. Xiao will use the five-year grant to advance his work on noncanonical amino acids.

“This innovative approach could revolutionize how we understand and control cellular functions,” Xiao said in the statement. Read more.