Houston Industrial Boom: Q&A with Mike Spears of Lee & Associates
Mike Spears
HOUSTON – (Realty News Report) – Houston’s industrial real estate market remains strong, driven by several factors, including a rise in e-commerce distribution centers and logistics facilities. According to Colliers International’s second-quarter 2018 industrial report, more than 12.3 million square feet of industrial space was under construction, much of it intended for distribution and logistics. Activity along the Houston Ship Channel is also robust. To better understand the sector’s outlook, Realty News Report interviewed Mike Spears, SIOR, CCIM, managing principal of Lee & Associates’ Houston office. Spears oversees the firm’s daily operations, has been involved in multi-million-square-foot deals, and is recognized as an expert in the North Houston market.
Realty News Report: How would you describe the state of the Houston economy right now?
Mike Spears: The economy is strong and has room to grow. Our office is busy; brokers frequently update me on market activity. Where Fridays used to be quiet, now teams often work past 6 p.m., a sign that business is expanding. Clients are growing at a pace I haven’t seen in years. Activity has increased to the point that deals are closing routinely and quickly, reminiscent of past cycles when brokers returned from property tours to find multiple offers waiting.
Realty News Report: What new trends are emerging in Houston real estate?
Mike Spears: Real estate investment is back in focus. As the energy sector recovers, companies need more space, driving demand across industrial and commercial markets. Houston’s import/export businesses and the Texas Medical Center are also thriving, attracting companies and talent. Many businesses are relocating here due to the city’s business-friendly environment and comparatively lower regulatory hurdles—permits that can take years in other states are often quicker in Houston. Land prices have risen but remain lower than on the West Coast. Additionally, Houston is increasingly a manufacturing hub, further supporting demand for industrial properties.
Realty News Report: How will e-commerce affect Houston’s commercial real estate?
Mike Spears: E-commerce continues to shift consumer behavior toward online purchasing, which will change how much space traditional retailers need. This doesn’t mean retail will disappear, but the footprint will evolve. Some high-end retailers will still rely on in-store experiences, but many companies are expanding online operations, increasing demand for distribution centers. Corporations are moving to place distribution facilities within 10–20 miles of consumer markets. The industrial sector benefits from this trend, and it also raises demand for more skilled warehouse labor as automation and robotics are increasingly used. Workers now need technology skills to manage automated systems and coordinate robotic fulfillment, not just operate forklifts.
Realty News Report: Amazon’s acquisition of Whole Foods gives it a grocery footprint. How might that change Houston’s commercial real estate?
Mike Spears: Whole Foods provides Amazon with a retail gateway and a different distribution model. We may see stores adapted to include more integrated distribution and loading areas to support both retail and fulfillment. Future locations could be larger or be designed with increased back-of-house warehouse and loading capacity. Retail center layouts may shift to prioritize more substantial distribution zones behind storefronts to accommodate omnichannel operations.
Realty News Report: A substantial amount of warehouse space is under construction—much more than in 2017. Why?
Mike Spears: The recovery in energy, combined with growing e-commerce activity, has strengthened industrial demand. Manufacturing buildings that sat vacant in north and northwest Houston are now occupied, prompting more speculative development. Large corporate campuses for companies like ExxonMobil and FMC are also driving nearby development, as tenants want proximity to these hubs. Population growth, rising e-commerce, and a healthier energy sector together explain the surge in warehouse construction.
Realty News Report: Why are many projects happening near the Port of Houston?
Mike Spears: The Ship Channel remains a major economic driver. With lower feedstock costs, downstream industries are expanding capacity to export more product. Increased plastics production and exports to markets like China, where goods are often manufactured and returned to the U.S., are intensifying port activity. Deepening and improvements to the Ship Channel, along with the Panama Canal expansion, allow larger ships and greater throughput. We also see permits for new LNG facilities and ongoing LNG plant construction supporting future export growth through the Port of Houston.
Realty News Report: How has the expansion of chemical plants and pellet production affected Houston’s commercial real estate?
Mike Spears: Growth in the chemical sector increases demand for distribution and warehouse space to move products through the supply chain. The port-driven import/export activity adds pressure for larger warehouses and logistics solutions, including rail-served facilities. Where rail-served buildings once carried a 5–7 percent premium, rising demand has pushed that premium closer to 15 percent. At the same time, developable land is becoming scarcer, which further tightens the market.
Realty News Report: Looking ahead 10 to 20 years, what does Houston’s future look like?
Mike Spears: Over the next two decades, I expect Houston to grow into the nation’s third-largest city, potentially surpassing Chicago. The economy will become even more diverse than it is today. Houston has evolved since the 1980s and demonstrated resilience across sectors: when upstream energy struggles, downstream and other industries often perform well. The Texas Medical Center’s research could yield global breakthroughs that further boost the region. With continued population growth, business-friendly policies, and room to expand, Houston’s role as a major economic engine for the U.S. will likely strengthen, attracting both jobs and investment.
