HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Houstonian Chris Lewis wrangles what many believe is like taming the West – data center development. It’s the frontier Texas has led almost from the beginning as data centers spring up along natural gas pipelines, on suburban land near electrical substations.
Prime locations for new data centers can be located by experts who know what to look for.
“You can plot it on a map,” says Lewis, Managing Principal of the Lee & Associates – Houston commercial real estate firm. “Look for the points where land, transmission lines, electrical substations and potential gas supply come together.”
Finding the right locations for data centers is not a task to be tackled at a leisurely pace. The current Gold Rush for quality sites with power could be depleted within three years, Lewis said.
Two Lee & Associates Managing Principals – Lewis and Mike Spears – led a Q3 roundup in their offices in the Memorial City area for a select group of real estate writers to talk about what they consider a fantasy quarter of big deals, bigger leases and what they call “the gold rush” in AI development, a boom that they know has an expiration date.
Houston Industrial Market
Houston’s industrial distribution market delivered a record-breaking third quarter of 2026, demonstrating the remarkable depth and resilience of tenant demand across the region. Net absorption is a record 10M SF in Q3 up 49% from Q2 while leasing activity climbed to a record 10.4M SF, making an exceptional quarter for Houston’s industrial market. Year-to-date absorption is 23.1M SF moving ahead of the 21.4M SF delivered through September 2026, says Lee Principal Richard Glass. “Absorption has moved ahead of supply.” He also shared he’s noticed what he calls a “flight to quality.”
Direct vacancy dropped from 6.4% to 5.3% reinforcing continued demand throughout Houston’s major corridors. In new construction, deliveries for Q3 are at 5.9M SF. Year-to-date deliveries are at 21.4M SF.
“Developers are becoming more disciplined with new developments as the money supply begins to constrict with interest rates,” says Glass. Houston has 13.5M SF under construction currently in Houston, with 25% in NW Houston, 22.1% N Houston, 20% SE Houston and 15% in South Houston
As far as leasing activity by submarket, a solid third took place in SE Houston, totally 3.4M SF. A close second – 2.3M SF or 25.5% happened in NW Houston. N Houston saw 1.9M SF or 19%. These top 3 submarkets accounted for 74% of the leasing activity.
Notable deals:
Tesla– 1.2 M SF TGS Cedar Port Logistics – SE Houston
Tesla– 800,405 SF Cedar Port Logistics – SE Houston
Spike Electric– 643,118 SF Bayport South – SE Houston
Port of Houston
At the Port of Houston, Glass reports that container activity remained stable while imported steel tonnage increased 49% year over year. General Cargo increased 22% and crude oil exports increased 40%.
The Office Market
Lee Principal Bill Insull noted the continued migration of office deals about 10 miles west of downtown. “Downtown is losing occupancy to down-sizing and migration, and, the suburban markets are propping up the overall office market with Class A suburban office space contributing over 800,000 SF of net absorption YTD, to the citywide YTD net absorption of just over 50,000 SF.”
“This comes at a time when more companies than ever are looking to locate their offices closer to where their employees live – unlike past decades where proximity to the CEO’s residence ultimately drove office space selection decisions,” Insull says.
Retail Centers
Senior VP Brandi Dees oversees retail, fuel and automotive and says 45% of her business is in the north and northwest areas of Houston. “My EV clients have stepped up and partnered with larger players like Tesla to install charging stations to keep up with demand. She has 11 centers in Waller showing growth, with tenant mix including wellness, health, med spas, exercise. “Ten years ago, that was not the case,” she says. “Rents that were $18 are now in the 30s, and we are finding that the fact that we can do property management, maintenance and full service is much in demand. She has an Asian center on Bellaire Blvd, Ad Hoi Marketplace that is thriving.
The Lee & Associates – Houston firm has a national reach and it owned locally, by “local people who make local decisions,” says co-founder Mike Spears. While their business may see more emphasis on tech or AI, what does not change is our commitment to long-term relationships.”
Chris Lewis started the Houston office in 2015 with four brokers. Spears joined him in 2016. “We both carry the title of Managing Principal and alternate years being President (I have odd years),” says Lewis.
Oct. 30, 2026, Realty News Report Copyright 2026
Feature image: Downtown Houston. Photo credit: Realty News Report, Copyright 2026
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