‘Bigger And Better’: What The Austin Industrial Market Looks Like To STG Design’s Scott Grubb

The U.S. industrial market experienced a year of abundant demand and record-high construction activity in 2022. This was particularly true for cities like Austin, Texas.

Austin’s industrial market ended last year with record-shattering numbers, delivering more than 13M SF of new construction and hitting some of the lowest vacancy rates the market has seen in years, driven by consistent demand. 

While there is always the risk of market setbacks like supply chain disruptions and permitting issues, Austin’s industrial sector is likely primed for another successful year ahead.

“Over the years, Austin’s industrial market just gets bigger and better,” STG Design's Director of Design Delivery Scott Grubb said. "Buildings are getting taller, and storage technology is becoming more advanced.”

Grubb spoke at the March 1 Bisnow Austin Industrial Update Conference. Afterward, Bisnow caught up with Grubb to find out more about his work at Texas-based architecture and interior design firm STG Design, how Austin’s industrial market is rapidly expanding and how the most pressing obstacles facing today’s market are affecting the way business is executed. 

Bisnow: What inspired you to speak at Bisnow’s industrial event on March 1?

Grubb: It’s easy to forget why we're doing what we do as architects. This is why I believe that, as architects, we need to go to these types of events where you're talking to the developers, real estate agents, brokers and others who are creating the projects that we get to design.

Bisnow: How would you best describe your position at STG?

Grubb: I am the director of design delivery and lead our studio that focuses on industrial projects. Our industrial studio includes logistics and distribution facilities and manufacturing. We also work on other tilt-wall project types such as office and labs.

Bisnow: What other projects is the STG Industrial Studio working on?

Grubb: Some local projects we are working on are a project for St. John's Properties in Georgetown and the Austin Energy Service Center with Trammell Crow. We are also working on several larger industrial projects in the Taylor-Hutto area.

The philosophy of STG is that for a project to be successful for both us and our client, we have to hit three points. One, is to properly manage the project, from a schedule standpoint, financial standpoint and other project administration needs.

The second is what we call design advocacy, which is what we, as architects, are often most passionate about: providing pleasing designs and functional solutions for our clients. 

The third is the delivery of quality construction documents and specifications. You could have a great design and stay within the budget and the schedule, but if the construction drawings are no good, the contractor is not going to understand the project vision and requirements, which may unnecessarily increase construction costs.

Bisnow: What are some trends in the industrial sector right now?

Grubb: I've been in Austin since the mid-’90s. About 10 years ago, there was a noticeable increase in industrial real estate activity.

At that time, we would mostly work on speculative builds in the neighborhood of 100K SF. We would go in and design logistics/distribution-type warehouse projects, with 24-foot clear heights and 40-foot column spacing. Over the years, it just gets bigger and taller. Now, we're seeing clear heights up to 40 feet and 52 feet column spacing. 

Nationally, we're seeing automated storage systems. As buildings get taller for these new, more efficient storage systems, there's an opportunity to bring in three-level mezzanines, which is something I hadn't seen before. 

Bisnow: What do you think are the most pressing obstacles facing the industrial sector right now in Austin as well as nationwide?

Grubb: For Austin, in particular, it's the time it takes to obtain a permit. Just five years ago, we would anticipate a site development permit taking between four to six months. From start to finish, a design process took about six to nine months. Recently, the site development process by itself is taking between 14 and 16 months, sometimes even 18 months or longer. This has put a damper on developing projects in Austin.

Both locally and nationwide, we're also seeing costs as being a cause for concern, whether it's the cost of money or the cost of construction. Five years ago, when our clients would put together construction budgets at the beginning of their project, they included an escalation of about 3% to 4% per year. Now we're seeing an escalation of upwards of 15% a year. 

This article was produced in collaboration between Studio B and STG Design. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.