Tesla Keeps Expanding in Central Texas, Now With These Plans in Austin Suburb with CoStar News

Electric Vehicle Maker’s New Industrial Space Effort Shows No Stop to Growth in Region

Tesla started work in Austin, Texas, on what’s been called the world’s second-biggest factory in 2020. Then the electric vehicle maker decided to move its headquarters to the area from California. Now, the company is showing no signs of stopping its regional growth, with plans to lease and renovate an industrial warehouse 30 miles from the plant in an outlying suburb.

By making itself at home in an industrial space in the Austin suburb of Hutto, Tesla would be doing more than occupying a 35,000-square-foot building. Its plans for more than $1.5 million of renovations for the structure at 200 County Road 199 for construction to start this month signal its quickly established position as a symbol of corporate growth in the region.

The region “is becoming the place to be for future-focused development,” said Ashley Bailey, Hutto’s director of development services, in a statement. She noted this is partly due to “substantial technology investments continuing to come to Hutto and our neighbors.”

That growth comes as Austin, in the past five years, has been ranked by real estate investors as a place to develop. Large tech companies have been putting operations in the Texas capital city for decades, with more recent moves by Apple, Google and Facebook, attracted by graduates of the local branch of the state university. The region has also been helped by lawmaker efforts to keep state taxes low and be welcoming to businesses.

The Tesla site in Hutto, northeast of Austin, would add to the company’s growing presence in Central Texas that now extends from the northeastern suburbs of Austin to a manufacturing parts facility in San Antonio.

Tesla has had a major effect on greater Austin since Elon Musk relocated his company’s headquarters to the Texas capital city from California in 2021. Tesla has added about 15,000 jobs to the Central Texas economy since 2021, more than three times the amount of jobs Tesla committed to creating in the Texas capital, company leaders said at a Travis County Commissioners Court meeting in October.

While there has been significant investment by Tesla, there’s no guarantee the company won’t move more of its investments to other regions as technological advancements require increasingly modern facilities. Austin ranked lower with investors compared to other cities after the pandemic hit, disrupting commercial real estate development patterns.

Major Building Construction

Even so, Tesla’s investment is significant for the region. One Tesla representative who spoke at the meeting last fall said the company’s new factory is about 50% larger than the Pentagon building and is “the second largest factory building in the world.”

The investment by Tesla shows how a company moving from one region to another can quickly change an area’s real estate dynamics. At the time Tesla announced its headquarters relocation in 2021, a site selection consultant told CoStar News that the location branding value for Austin would be enormous and put “the region front and center in the burgeoning electric vehicle industry.”

Tesla spent about $387 million on suppliers within Travis County, where Austin is located, between 2020 and 2022. Tesla’s sales activity, meanwhile, jumped from $400 million in 2020 to $2.1 billion in 2022, the company’s leadership team told commissioners.

Tesla’s new space in Hutto is in an industrial building formerly occupied by The JRS Company, a plastics manufacturing business, according to the city of Hutto. Tesla’s plans for Hutto represent another win for the East Williamson County area, Bailey added.

Tesla is occupying a portion of an industrial building formerly occupied by The JRS Company in Hutto, Texas. (CoStar)

He said major data center operators such as Skybox and Titan MegaTech Center recently planted flags in Hutto.

The city is also attracting suppliers to Samsung Electronics’ multibillion-dollar semiconductor plant that is being built nearby in Taylor, Texas, Bailey said.

Hutto officials point out that Tesla’s expansion plans in the city must still clear the permitting and inspections process before additional details about the project could be made public.

A spokesperson for the city of Hutto did not immediately respond to a request for further comments.

The announcement of Tesla occupying space at an industrial building in Hutto comes about five months after the mayor of Kyle, Texas, reportedly revealed the electric vehicle manufacturer committed to leasing a portion of an industrial park in one of Austin’s southern-most suburbs.

Visit the CoStar website to read the original post.