Picking the wrong site costs money for years. Picking the right one makes a project work. This guide walks you through a full site selection analysis for commercial property in Texas, step by step, in plain language.
Texas has rules most other states don’t. Cities have no power to zone land in the county. Some big cities have no zoning at all. Water and power can run short. So a plan that works in Ohio may fail here. Use this guide as your site due diligence checklist.
What a Site Selection Analysis Is
Site selection means matching what a project needs with what each place offers. The process usually covers picking and checking communities, real estate site analysis, buying the land, and sometimes negotiating tax incentives.
Think of it as commercial location analysis plus math. You gather facts. You score sites. You pick one.
Your corporate location strategy should answer three things:
- What does the business need to run well?
- Which places can meet those needs?
- What will each place cost over 10 years?
Step 1: Set Goals and Build a Scorecard
Start with your needs, not with listings.
Size your space first
Use simple benchmarks to guess how much room you need. Office space often runs 150 to 250 square feet per employee. Retail runs about 15 to 25 square feet per customer at peak times. Industrial depends on racking, loading needs, and ceiling height. Add another 10 to 20 percent for hallways, shared space, and growth.
Write your criteria down
Build a site selection criteria matrix. List every must-have and nice-to-have. Then give each one a weight from 1 to 5.
This becomes your weighted site selection scorecard. Planners call this method multi-criteria decision analysis (MCDA). It stops gut feeling from taking over.
Set your process
These are the core site selection process steps:
- Define needs and weights
- Site screening and shortlisting
- Site suitability analysis on the short list
- Comparative site analysis across finalists
- Site visit field verification
- Go/no-go site decision
Send a site search RFI/RFP to brokers and local economic development groups. Ask each one the same questions. That keeps answers easy to compare.
Then run a highest and best use analysis and a full commercial property feasibility study on your top two or three sites.
Step 2: Gather the Data
Start by pulling spatial data such as zoning maps, parcel data, traffic counts, and infrastructure networks. Then layer in demographic data like age and income, and check how close each site sits to highways, transit, and utilities.
You want parcel-level data for every candidate. That means owner, size, shape, and tax record.
Use GIS heat mapping to see patterns fast. Color the map by income, jobs, or traffic. Bad sites drop out quickly.
Pull annual average daily traffic (AADT) counts from TxDOT. TxDOT runs over 75,000 short-term traffic counts each year and keeps more than 350 continuous count stations running all day, every day. AADT is figured from a volume count, an axle factor, and a seasonal factor, and the data comes from the STARS II system.
Step 3: Run a Market Analysis
Now study the market. A good commercial real estate market analysis covers supply, demand, and price.
Check these numbers for each submarket:
- Submarket vacancy rate
- Net absorption over the last four quarters
- Asking rent per square foot
- NNN lease rates for your product type
- Rent comparables from recent deals
- Construction pipeline inventory still being built
- Sales comps and price per square foot
- Capitalization rate (cap rate) for recent trades
Then look at why demand exists. Study the employment base and demand drivers. A city with many stable industries holds up better in a downturn.
Texas industrial demand drivers include trade with Mexico, energy, and e-commerce. A DFW industrial submarket analysis will look very different from one done in the Rio Grande Valley.
For retail, run a retail sales leakage analysis. It shows dollars leaving the area because no local store sells that item. That gap is your opening.
Finish with competitive set mapping, a tenant demand analysis, an absorption forecast, and a market cycle view. Ask if you are buying at the top or the bottom.
Step 4: Study People and Trade Areas
Trade area analysis tells you who can reach your site.
Run a drive-time radius analysis at 5, 10, and 15 minutes. Drive time beats straight-line miles. Rivers, rail lines, and highways block travel in ways a circle hides.
Then pull these numbers:
- Daytime population, which matters for lunch spots and offices
- Median household income by census tract
- Population growth projections
- Household formation rate
- Psychographic segmentation, which groups people by lifestyle
Next, add movement data. Mobility data shows travel patterns, helps define trade areas, measures cannibalization, and shows cross-shopping. Mobile location data and foot traffic analytics turn guesses into counts.
Run a cannibalization analysis if you already have nearby stores. A new site should grow total sales, not just move them.
Last, check the site itself from the street:
- Ingress and egress and curb cuts
- Visibility and signage exposure
- Site accessibility and connectivity
Step 5: Check Texas Land Use Rules
This is where Texas gets strange. Read this part twice.
Zoning is a city power only
Municipal zoning is a broad power held by Texas cities of every size. Counties have limited land use power, and that power does not include zoning, though counties can regulate platting. Zoning rules are set city by city and vary a lot from place to place.
Houston is the famous exception. It has no zoning. Instead, Houston relies on deed restrictions to control what you can build. Private rules replace public ones.
Know your ETJ status
A city’s extraterritorial jurisdiction (ETJ) is a ring of land around the city. It runs one-half mile to five miles deep, based on city size. Limited city rules apply there. Under a recent law, an owner may opt out of the ETJ and escape city rules, though courts are now testing whether that law is constitutional.
So a landowner can file an ETJ release petition. That can cut red tape. It can also cut off future city water and sewer. Weigh both sides.
Other land use checks
- Platting and subdivision regulations
- Restrictive covenants recorded against the land
- Specific use permit and variance needs
- Setbacks, FAR, lot coverage, parking ratio
- Site plan approval timeline
- Municipal impact fees
- Certificate of occupancy steps at the end
- County platting authority and unincorporated land rules
- Annexation risk if the city grows toward you
- Texas Accessibility Standards (TAS) review, handled through the Texas Department of Licensing and Regulation
Add all of this up as entitlement risk and rezoning timeline. In hot markets, a two-year delay can kill a deal.
Step 6: Test Utilities, Power, and Ground Conditions
A pretty site with no power is just a field.
Power
Ask the utility for a utility capacity study and a will-serve letter. Get it in writing.
Then check the ERCOT interconnection queue if you need large loads. Ask about substation capacity and load availability. Small users should confirm three-phase power availability before signing.
Power is now the top limit on large projects in Texas. Note that dispatchable power projects get special treatment under state incentive law. The state designed its main incentive program as a competitive site selection tool, and it makes dispatchable electric generation facilities eligible to help strengthen the grid.
Other services
- Water and sewer CCN boundaries, which show who is allowed to serve the site
- Natural gas line capacity
- Fiber and broadband availability
The dirt itself
- Phase I Environmental Site Assessment
- Phase II ESA and recognized environmental conditions, if the Phase I finds problems
- Wetlands delineation and Section 404 permit needs
- FEMA flood zone and 100-year floodplain mapping
- Detention pond and stormwater drainage design
- Geotechnical report and expansive clay soils, a common cost shock in Texas
- ALTA/NSPS land title survey
- Severed mineral rights and surface use agreement
That last one is very Texas. Someone else may own the oil and gas under your land. They may have the legal right to drill on your surface. Fix that with a surface use agreement before you close.
Step 7: Check Water Early
Water stops more Texas projects than people expect.
Texas splits water into two types. Surface water belongs to the state, and using it for business needs a state permit. Groundwater belongs to the landowner as part of the property.
The rule of capture
If your land sits outside a groundwater conservation district, the rule of capture applies. That rule says groundwater your well brings to the surface belongs to you. You still cannot harm a neighbor or intentionally waste the water.
Groundwater conservation districts
Inside a district, rules apply. Districts can control well spacing and how much you pump. Within limits, they can deny a permit based on what it would do to the aquifer.
Districts must require permits for wells that produce more than 25,000 gallons per day. They also adopt management plans built around modeled available groundwater and other required data.
So ask about:
- Groundwater availability and the rule of capture
- Groundwater conservation district permit rules
- Modeled available groundwater (MAG)
- Desired future conditions (DFC)
- Surface water rights and diversion permit needs
- Process water capacity for manufacturing
- Drought contingency plan duties
- TPDES wastewater discharge permit needs
Step 8: Score Labor and Workforce
People decide where factories and warehouses go.
Run a labor shed analysis. It maps where workers live and how far they will drive. Set a labor draw radius and commuting patterns view around each site.
Then compare:
- Available workforce by SOC occupation code
- Prevailing wage rates by MSA
- Labor force participation rate
- Location quotient for manufacturing employment
- Unionization rate by industry
- Talent pipeline and community college programs
- Bilingual workforce availability
- Warehouse hourly wage benchmarking
- Competitive wage pressure from peer employers
- Commute time and employee turnover risk
- Workforce training grant options
- Fully loaded labor cost per FTE
Texas is a right-to-work state, which means union membership is low. That lowers labor risk for many employers.
Wages swing a lot by region. In Laredo, for example, the average hourly wage for a non-supervisory warehouse worker was $15.03 in the first quarter of 2024, below the national average of $19.12. The city had a labor force of about 113,125 workers, and more than eight million people live within 250 miles.
Step 9: Map Logistics and Border Access
Freight cost is often higher than rent.
Start with supply chain network optimization and a center-of-gravity analysis. These find the cheapest point between your suppliers and your customers.
Then check:
- One-day truck drive-time coverage
- Last-mile delivery radius
- Rail-served site status and rail spur feasibility study
- Intermodal terminal proximity
- Port drayage cost
- Truck route restrictions and weight limits
- Trailer parking ratio and truck court depth
- Cold storage and refrigerated distribution needs
The Mexico border matters
In 2024, trade crossing U.S. and Mexico land ports hit $737.6 billion, up 7.9 percent from 2023. Texas ports handled $567.5 billion of that, or 76.9 percent of the total. Laredo led every port with $339.0 billion, and El Paso followed with $107.7 billion.
The Laredo port complex includes the Colombia Solidarity Bridge, the World Trade Bridge, the Laredo Railroad Bridge, and Laredo International Airport, and it links to Interstate 35 and U.S. Highway 59.
If you trade south, look at:
- USMCA cross-border trade flows
- Nearshoring and maquiladora supply chains
- Foreign trade zone (FTZ) designation
- Customs brokerage and cross-border logistics services
Step 10: Price the Deal
Texas has no personal income tax. But property taxes are high. Model them early.
Property tax
- Texas property tax rate by taxing jurisdiction
- Appraisal district valuation methods
- Effective tax rate and property tax burden
- Overlapping taxing jurisdictions, which stack city, county, school, and special district rates
Remember the trade-off. No state income tax comes with a franchise margin tax and a big property tax bill.
Incentives
Texas offers real help if your project is large.
Chapter 380 of the Local Government Code lets cities offer loans and grants to grow local business. Chapter 381 lets counties negotiate directly with companies. Counties may also use Chapter 312 for tax abatement agreements.
The biggest state tool is the JETI value limitation agreement. The Jobs, Energy, Technology and Innovation Act was created by the 88th Texas Legislature in 2023 and began taking applications in January 2024. It lets a company, a school district, and the Governor’s office sign a 10-year property tax deal. Approved projects can get a 10-year, 50 percent limit on the taxable value of qualifying property. Projects inside a federally designated Qualified Opportunity Zone can get a 25 percent value limitation, which cuts the school maintenance and operations tax by 75 percent.
Also look at:
- Tax increment reinvestment zone (TIRZ) funding
- Type A and Type B economic development corporation money
- Freeport and goods-in-transit exemption for inventory
- Opportunity Zone designation
- Incentive negotiation and clawback provisions, which claw money back if you miss job targets
Build the model
Roll everything into a total cost of occupancy model. Include:
- Land cost per acre in Texas
- Land acquisition cost per acre for each finalist
- Earthwork and site work cost
- Offsite infrastructure cost and horizontal development cost
- Hard cost and soft cost budgeting
- Construction cost escalation
- Building permit fee schedule
- Utility tap and connection fees
- Traffic impact analysis (TIA) and required roadway improvements
- Gross acreage vs. developable acreage
- Usable land ratio after easements
- Building pad elevation and import fill
- Contractor and subcontractor availability
- Schedule risk and time to certificate of occupancy
Then finish the development pro forma and yield on cost. Compare that yield to market cap rates. If they are too close, the deal is not worth the risk.
Step 11: Plan for Risk, Insurance, and Hazards
Insurance costs have jumped in Texas. Price them before you sign.
Wind and hail on the coast
The Texas Windstorm Insurance Association provides windstorm and hail coverage in 14 first-tier coastal counties. These include Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy. It also covers risks east of State Highway 146 in parts of Harris County.
As of March 31, 2026, the association insured 286,251 properties with about $127.1 billion of total insured value.
To qualify, a property must be in the designated catastrophe area, have been denied coverage by at least one private insurer, and meet windstorm building code rules.
So budget for windstorm and hail insurance costs, Tier 1 coastal county windstorm certification, and a WPI-8 certificate of compliance.
Other hazards
- Hurricane and storm surge exposure
- Hail frequency and roof replacement reserve
- Induced seismicity risk, mostly in West Texas
- Wildfire and drought exposure rating
Step 12: Handle the Legal and Transaction Work
Once you pick a site, the paperwork starts.
Sign a letter of intent and purchase and sale agreement. Lock in a feasibility and option period. Set your earnest money and due diligence period so you can walk away if tests fail.
Then read the title work closely. Private land use rules show up in the Commitment for Title Insurance. Restrictive covenants appear in Schedule B-1, and recorded easements show up in later parts of that section. Public rules are usually on the city or county website, and many city codes are posted on MuniCode.
Your legal checklist:
- Title commitment Schedule B exceptions
- Easements and legal access
- Right of first refusal held by anyone else
- Estoppel certificates and SNDA for tenants
- Land assemblage and parcel aggregation if you need several tracts
- Seller disclosures and prior use history
- Environmental indemnity provisions
- Voluntary Cleanup Program enrollment for dirty sites
- MUD bond reimbursement rights
- PID assessment obligations
If tenants are in place, treat their leases as yours. Existing leases become your leases the moment you take ownership, so reviewing all of them is essential.
Last, run a clear lease vs. own analysis. Owning is not always better.
Step 13: Visit, Score, and Decide
Data misses things. Go see the site.
On a site visit, you may spot old utilities or construction that blocks parking. Pairing what you see with your data makes the final call much stronger.
Score every finalist with the same weights. Then make your go/no-go site decision and write down why. That record helps later when someone asks how you chose.
Site Types Have Different Rules
Not every project scores the same way.
| Project type | What matters most |
| Texas warehouse and distribution site selection | Truck access, dock count, labor supply |
| Retail pad site selection | Traffic counts, visibility, co-tenants |
| Medical office building site criteria | Parking, hospital distance, patient income |
| Data center site selection Texas power | Grid capacity, water, fiber |
| Flex and light industrial park | Small bay depth, drive-in doors |
| Industrial outdoor storage (IOS) | Paving, fencing, allowed zoning |
| Truck terminal and logistics yard zoning | Route access, noise rules |
| Self-storage site selection | Rooftops within three miles |
| QSR drive-thru site criteria | Stacking lanes, right-turn access |
| Grocery-anchored center co-tenancy | Anchor lease terms |
| Multifamily-adjacent retail demand | Unit counts nearby |
| Master-planned community pad site | Build-out pace |
| Semiconductor fab site criteria | Power, water, clean utilities |
| EV and battery plant siting | Rail, power, labor training |
You will also choose between a build-to-suit vs. existing building and a greenfield vs. brownfield site. New builds cost more and take longer. Old sites may carry pollution.
Market context shapes this too. The Austin commercial land market is priced very differently from the Houston Ship Channel industrial corridor.
Frequently Asked Questions
How to choose a commercial site in Texas?
Score sites against weighted criteria. Never rank by price alone.
What to check before buying commercial land in Texas?
Title, survey, zoning or deed restrictions, utilities, water, floodplain, and minerals.
How long does entitlement take in Texas?
A simple permit may take weeks. A rezoning plus platting can take a year or more.
Do I need zoning approval in Texas?
Inside most city limits, yes. In Houston, no, but deed restrictions still apply. In the county, there is no zoning, though platting rules still apply.
How much power can I get at a Texas site?
Only the utility can answer. Get it in writing.
How to find land by parcel ID?
Use the county appraisal district map and the county GIS site.
Who pays for utility extensions in Texas?
Usually the developer, unless a city agreement covers it.
Is the property in a floodplain?
Check the FEMA flood map, then confirm with a survey.
How to estimate property taxes on a Texas site?
Multiply the likely assessed value by the combined rate of every taxing unit.
What incentives are available for a Texas facility?
Local Chapter 380 or 381 deals, Chapter 312 abatements, and JETI for large projects.
How to compare two commercial sites objectively?
Use the same scorecard, the same data sources, and the same 10-year cost model.
Broker vs. site selection consultant?
A broker finds space and closes deals. A consultant compares regions, runs the analysis, and negotiates incentives. Big projects often need both.
Texas vs. California relocation cost comparison?
Texas usually wins on income tax, land, and permits. California may win on some talent pools. Model both; do not assume.
Best Texas cities for business relocation?
It depends on your inputs. Labor-heavy users look at San Antonio and the Rio Grande Valley. Power-heavy users look at West Texas. Trade users look at Laredo and El Paso.
