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 Click here to view the full 2008 Third Quarter Market Summary for El Paso, Texas and Cd. Juarez, Mexico
El Paso, Texas Overall industrial real estate activity in El Paso was significantly down from the 2nd quarter based on total square feet leased or sold. However, the last three months saw the same number of transactions as the previous quarter. Activity in the 3rd quarter was above average for the past five years with more than 1,000,000 SF of total transactions resulting in 780,000 SF of positive absorption. Unfortunately, there was an equal amount of new vacancies, so the industrial vacancy rate remained unchanged at 9.8% for the city’s 54,220,000 SF industrial base. In the 3rd quarter there were only two deals over 100,000 SF. The largest transaction in the city was Mitsui-Soko’s lease of 153,000 SF in the Pan American Park. This building will be used for warehouse operations supporting key clients in Juarez, Mexico. This building is now full as Electrolux expanded
into the remaining 50,000 SF on a temporary basis. Additionally Moduslink leased 150,000 SF of warehouse space on Don Haskins. This is the same space that MCS vacated earlier this year when they moved to Santa Teresa, NM. The Moduslink lease in El Paso is the Twin Plant to their
facility currently under construction in Juarez. The remainder of industrial activity in El Paso were generally leases of smaller spaces and often on shorter terms. Activity was spread out across the market. As the overall U.S. economy continues to show signs of a recession, we expect
to see this trend toward more flexible lease terms continue well into next year, especially for third party companies associated with the maquila industry. Our expectation is that activity and absorption in the 4th quarter will continue to fall off from what we saw during the first half of the year, but annual activity for 2008 will surpass what we experienced in 2007. With vacancy lingering just below the historical norm of 10.0%, lease rates should remain fairly stable and firms should have no difficulty finding space across
town. The only tight segment of the market continues to be in the Class “A” space, 100,000 SF and larger. If activity remains strong in Juarez heading into next year, this will create some problems for warehouse and logistics firms vying for distribution space on the US side of the border. Cd. Juarez, Mexico Industrial real estate activity in the 3rd quarter of 2008 was strong in Cd. Juarez and in line with quarterly activity over the past two years. Activity was a mixture of new investments for the city and expansion or relocation requirements from the existing industrial base. Overall there was 1,545,000 SF of total activity resulting in 1,200,000 SF of positive absorption. | 
 
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During the same three month period, 450,000 SF of space came back on the market through vacancies, resulting in 750,000 SF of net absorption. During the 3rd quarter, Cd. Juarez saw 1,150,000 SF of new construction starts for both build-to-suit and speculative projects. This new construction increased the total industrial supply of industrial buildings over 30,000 SF to 56,380,000 SF. Due to 520,000 SF of speculative construction and the 750,000 SF of negative absorption the overall vacancy rate increased to 7.7%, up from 6.4% at the start of 2008. Affinia Brake Parts was one of the largest new companies entering Cd. Juarez during the 3rd quarter, leasing an existing spec building from American Industries. The 120,000 SF spec building will be expanded to 207,000 SF for Affinia by the end of the year. This transaction coupled with Orange County Container’s expansion option for an additional 120,000 SF fills out the American Industries’ Kimco Park in the Salvarcar Industrial Area. ModusLink was another new company entering Cd. Juarez in the past quarter. ModusLink is a transportation and logistics company which leased 210,000 SF in Verde’s Independecia II Park. This facility is being built next to the Intermatic facility that is currently under construction. VienTek and Victory Packaging are two existing firms in Cd. Juarez that had significant new projects. VienTek is expanding their wind blade manufacturing campus on Las Torres Ave. by 198,000 SF. This will fill out their campus with a total of 675,000 SF in two buildings. Victory Packaging is also relocating
from the Neptuno/Zaragoza industrial complex into a 220,000 SF build-to-suit on Blvd. Independecia. Industrial Global Solutions (IGS) out of Mexico City is the developer of this project and it is their first investment in Cd. Juarez. The solid 3rd quarter activity kept Cd. Juarez on pace for another record-setting year in 2008, surpassing what we saw last year. We expect activity to remain steady over the next six months with vacancy rates staying between 6.5% to 7.5% and Class “A” 
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