Texas Border Business
By Roberto Hugo González
The second edition of the Industrial Warehouse Summit (IWS2), held on August 29, 2023, has now evolved into a significant series of events. These summits serve as a convergence point for key stakeholders in the industrial warehouse sector, offering a platform to discuss, collaborate, and strategize avenues for the industry’s expansion and enhancement.
The Summit strongly advocates for the principles of regionalism and mutual growth, stating that the prosperity of individual stakeholders has the potential to elevate the sector as a whole.
Joaquin Spamer, a pivotal figure in the development and promotion of the Tamaulipas Mexico and South Texas regions, made his presence felt during this impactful summit. As the Founder and President of CIL Group, Spamer oversees a conglomerate of companies like Commodities Integrated Logistics, SALSA, Bio Safe, CIL Capital, and CIL Fresh, among others.
His advisory roles extend to the McAllen Economic Development Corporation, The prosperity Task Force of the Hidalgo Country, The South Texas Representative of the AmCham, and he also served as the President of The Binational Council for Economic Development of Reynosa.
During the IWS2 event in Pharr, Texas—spearheaded by Luis Bazan, CPM Bridge Director of the International Bridge in the City of Pharr—Spamer took the initiative to highlight some pressing concerns. He focused particularly on the competitiveness, or lack thereof, in the real estate market, which is marked by contentious commission rates. He also compared the competitiveness of realtor commissions in four major U.S. cities—Dallas, Houston, Los Angeles, and New York—to that of South Texas.
Spamer’s remarks were laser-focused on how the South Texas region could better attract and sustain industrial development. Although he recognized the ongoing initiatives by city governments, state authorities, and private organizations, he pinpointed two critical issues that deserve immediate attention: the exorbitant cost of insurance premiums and unreasonably high industrial realtor commissions.
Concerning Insurance Costs: Spamer lauded the endeavors by various cities across South Texas to elevate competitiveness. For example, the state of Texas is offering property tax incentives to fuel industrial growth, and private investments in the same area are quite significant. Despite these efforts, he stressed that the steep insurance premiums are acting as a roadblock to development. He proposed that increasing the number of insurance brokers could stimulate competition and eventually bring down costs.
Regarding Realtor Commissions: Spamer was unequivocal in stating that South Texas suffers from a scarcity of real estate agents, leading to exorbitant commission rates. In larger markets such as Dallas, Houston, LA, and NY, commissions drift around 1.25-2%, while in South Texas, they are as high as 5%.
Spamer emphasized the need for action, suggesting that a 5% commission rate substantially inflates the costs associated with leasing or buying industrial properties. He advocated for the introduction of more real estate professionals to invigorate competition, thereby benefitting clients with more affordable commission rates.
Spamer’s Solutions for a More Competitive Market. He urged the industry to encourage more insurance brokers to enter the market, thereby enhancing competition and reducing insurance premiums.
He recommended local promotion of the real estate profession to swell the ranks of industrial realtors, thereby enhancing competition and potentially driving down commission rates.
According to Spamer, while the state of Texas and the private sector are making commendable strides to bolster industrial development, tackling the issues of high insurance costs and realtor commissions could provide an additional competitive edge.
Data substantiates Spamer’s claims that the real estate market in South Texas lags behind its counterparts in major cities in terms of competitiveness, evidenced by higher average commission rates. By contrast, markets in cities like Dallas, Houston, Los Angeles, and New York are far more competitive, courtesy of a higher density of realtors and more technologically sophisticated trading platforms.
To mitigate this disparity, Spamer suggests that South Texas should introduce more Realtor Training Programs. This would increase the number of realtors and insurance brokers in the market, thereby offering more competitive pricing and accelerating the development of large industrial facilities. Such measures could also make the region more appealing for developers and entrepreneurs alike, nurturing an environment of growth and competition.
He mentioned that this proposal is only for the Industrial real Estate brokers; he believes that the commissions paid to the residential brokers are fair since they do a lot of hard work in connecting buyers and sellers. Those residential commission are a lot smaller than the extremely large commissions paid for leasing or selling large Industrial Real Estate.
