Stream Realty Sells Tesla Megapack Hub in West Houston

Two massive buildings leased to Tesla in Brookshire are changing hands, the latest sign that fully leased industrial buildings in Houston’s west corridor still command institutional capital.

Dallas-based Stream Realty Partners sold Buildings 9 and 10 at Empire West Business Park to New York-based investment firm BGO. The deal for the nearly 1.7 million-square-foot portfolio closed Feb. 5, Stream told the Houston Business Journal.

The buildings are fully occupied by Tesla, which uses the facilities to manufacture Megapack batteries — utility-scale storage units designed to support the power grid as back-up generators and balance renewable energy loads. The 1 million-square-foot Building 9 at 111 Empire Boulevard was leased in late 2022. The 616,463-square-foot Building 10 at 103 Empire Boulevard, the park’s final structure, was completed and leased last year.

Tesla has signaled big ambitions for investing in the site. During a Waller County Commissioners Court meeting last March, a company representative said it plans to replicate its “Megafactory” model in Lathrop, California, capable of producing 10,000 Megapacks annually, or 40 gigawatt hours of storage.

Under a tax abatement agreement reached early last year, Tesla planned to invest roughly $200 million into the two buildings, according to the outlet. That includes $44 million in real property improvements and about $150 million in manufacturing equipment at Building 9, plus $5 million in warehouse equipment at Building 10. The company also agreed to create 1,500 jobs by the third year of the agreement. In exchange, Waller County granted Tesla and Stream a 60 percent tax abatement on the value of the improvements and buildings.

The sale follows Stream’s October disposition of three other Empire West buildings totaling 1 million square feet to NorthPoint Development.

Empire West is Stream’s largest project to date and sits in a fast-growing industrial pocket west of Katy along I-10, where tenants include PepsiCo, Amazon and Costco.

— Eric Weilbacher