In a significant move signaling its growing presence in Texas, Tesla is set to lease substantial warehouse space in Hays County, located south of Austin, Texas.
Mayor Travis Mitchell, in his recent State of the City address, revealed that the Austin-based car manufacturer has plans to lease three out of the five buildings in the newly developed Kyle/35 Logistics Park. This development spans a whopping 1.4 million square feet and is strategically situated along the interstate near Logistics Drive and South Goforth Road, reports the Austin Business Journal.
The purpose of this expansive space, which is approximately 35 miles south of Tesla’s billion-dollar gigafactory, is for “warehouse storage and light assembly,” according to Mitchell.
Initially, Tesla will occupy just under 1 million square feet of this space. However, insiders have hinted to the Austin Business Journal that Tesla might eventually lease the entire park. To put this into perspective, the Barton Creek Square mall occupies about 1.2 million square feet.
The Kyle/35 Logistics Park, developed by the Houston-based Alliance Industrial Co., stands as the first of its kind in the region between Austin and San Antonio. It was initially approved as a speculative project exceeding 1 million square feet. The park, which began construction in June 2022, was intriguingly codenamed “Project Fire Engine Red” in economic development circles. It boasts five state-of-the-art logistics buildings, with sizes ranging from 140,000 square feet to 475,000 square feet.
These buildings are designed to cater to a variety of tenants, accommodating end users between 40,000 and 1.4 million square feet. The park’s development was previously projected as a $115 million capital investment, potentially generating around 1,500 jobs.
In terms of incentives, both the city of Kyle and Hays County have previously approved performance-based incentives with Yarrington Logistics Owner LP, an Alliance subsidiary. The Hays County deal offers property tax abatements capped at 75% over a decade, valued at an estimated $3.4 million. Meanwhile, the Chapter 380 agreement with Kyle provides a tax rebate of 75% for the same duration, amounting to roughly $4.9 million.
Tesla’s influence in Central Texas is undeniable. It stands as the largest manufacturer in the Austin vicinity in terms of both space and workforce. Since Elon Musk’s 2020 announcement of Tesla’s billion-dollar gigafactory east of Austin, the region has experienced the “Tesla effect,” with suppliers flocking to the area, leasing properties, hiring in droves, and fundamentally transforming local communities.
Giga Texas is manufacturing Tesla’s Cybertruck, slated to debut sometime in Q3 and has recently been seen all over the gigafactory.
