Industrial Construction is Up, But There’s Still Room to Improve

Inspired by recent news about manufacturing projects in Texas, such as Tesla’s megafactory near Katy and TMEIC’s manufacturing expansion in Waller County, I found myself taking a closer look at the state’s manufacturing trends over the past few years.

Texas has been experiencing an industrial construction boom that rivals anything seen in recent decades. Semiconductor plant investments alone hit $15 billion in 2023, nearly 24 percent of the U.S. total, with additional projects planned or underway in Sherman and Taylor. Beyond semiconductors, large-scale initiatives in hydrogen production, liquefied natural gas exports, and chemical plants are driving local construction and employment.

Data centers and cloud infrastructure add another layer of growth. Texas accounted for over 10 percent of U.S. data center construction in 2023, up from less than 1.6 million square feet in 2017. This digital expansion reflects the state’s energy capacity, land availability, and technical workforce—factors that are increasingly intertwined with manufacturing growth.

What’s driving this growth? First, Texas boasts a strong and diverse energy sector, ranging from traditional oil and gas to renewables like wind and solar. This ensures both a stable power supply and relatively low electricity costs, which is crucial for energy-intensive semiconductors and data centers. Second, Texas has abundant land near major population centers, a flexible regulatory environment, and a diverse growing labor force fueled both by local education and inward migration. This workforce ranges from engineers and high-tech specialists to the skilled laborers needed to build and operate large-scale factories, allowing companies to staff both advanced manufacturing roles and broader operational needs efficiently.

Looking ahead, we’re likely to see more partnerships between tech companies and manufacturers, increased investment in automation and digital manufacturing, and a stronger focus on sustainability. At the same time, Texas can further strengthen its competitive edge by enhancing site readiness. Having land alone is not enough. Today’s manufacturers and logistics companies are looking for parcels that are not just available, but fully prepared for rapid development, including cleared due diligence, efficient permitting processes, and utility extension planning. In this category, Texas has room for improvement to surpass South Carolina and Georgia as the top state for doing business overall.

Views expressed on The 338 are those of the authors and do not imply endorsement by the Texas Real Estate Research Center, Division of Research, or Texas A&M University.