MDH Acquires Tesla-Leased Logistics Park Near Austin
The automaker uses the 1.4 million-square-foot campus in support of its gigafactory.
Alliance Industrial Co. has sold the 1.4 million-square-foot 35 Kyle Logistics Park in Kyle, Texas, to MDH Partners. The property is 100 percent leased to electric vehicle maker Tesla, which uses it for storage and light assembly in support of its gigafactory in Austin.
Completed in 2023 as a spec development but quickly leased by Tesla, the property consists of five buildings ranging from 140,300 to about 474,400 square feet. The facilities feature 36- to 40-foot clear heights, ESFR sprinkler systems and parking.
JLL Capital Markets represented the seller in the deal. The team included Industrial Group Co-Lead & Senior Managing Director Trent Agnew, along with Senior Directors Witt Westbrook, Kyle Mueller, Charlie Strauss and Tom Weber. Considering the location and the ironclad quality of its tenant, the property attracted a lot of investor interest, according to Agnew.
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“Interest level was strong from a mix of institutional investors due to the construction quality and tenancy primarily,” Agnew, Industrial Group co-lead and senior managing director told Commercial Property Executive.
“Austin continues to be a preferred market due to the long-term population growth projected, as well as the anticipated multiplier effect relative to tenant demand as a result of the Tesla gigafactory expansion—Samsung, Applied Materials and others,” Agnew said.
The campus takes its name from Interstate 35, which connects Austin with San Antonio, and has been a focus of commercial and residential boom in recent years. Under an agreement with Hays County, the developer, Alliance, received property tax reductions totaling more than $3 million, according to The Real Deal.
The town of Kyle has nearly doubled in size over the past decade, according to Census Bureau data. Though part of metro Austin, it is for now considered a relatively more affordable suburb of that city.
Alliance Industrial Co. has invested in 20 projects since its inception more than three years ago, totaling nearly 6.6 million square feet, and controls over 5 million square feet for future investment. The company is headquartered in Houston.
Atlanta-based MDH Partners manages funds targeting U.S. industrial real estate on behalf of institutional investors. The company has led or participated in more than $6 billion (90 million square feet) of acquisitions, developments and asset management as an advisor and investor.
Tesla continues Texas expansion
Tesla’s headquarters are at the company’s gigafactory in Austin, where it moved in 2021 from its former location in Alameda County, Calif., with the company maintaining—and even increasing—its operations in California. The Austin site employs 20,000 workers, making it the second-largest employer in Travis County, where the company builds Model Y SUVs and the Cybertruck at a facility that spans more than 10 million square feet.
Besides producing vehicles at the gigafactory, Tesla makes battery packs and cells for its batteries, and oversees plastic injection molding and stamping press lines, alongside other activities associated with its EV lines with an overarching goal of being more vertically integrated.
The gigafactory is hardly the auto tech giant’s only facility in the Austin area, where it occupies at least 4.5 million square feet—including the leases at 35 Kyle Logistics Park and other facilities—a number that is growing. Near Corpus Christi, Texas, Tesla started work on a lithium refining plant, and it occupies 440,000 square feet of San Antonio warehouse space.
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