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 Click here to view the full 2008 Year End Market Summary for El Paso, Texas and Cd. Juarez, Mexico
El Paso, Texas 2008 was a good year for El Paso’s industrial real estate market despite the fact that there was a significant decline in demand in the 4th quarter that we expect to carryover well into next year. Of the 4.0 million SF of industrial activity (leases, renewals and sales) only 165,000 SF occurred in the final three months of the year. Of the 4.0 million SF in activity, half was positive industrial absorption. The most notable transactions are listed on the following page, but seven of the top ten were warehouse and logistics requirements. The expansion of Werner Ladder and Ryder Logistics in the Americas Logistics Center in Socorro accounted for over 500,000 SF of activity and resulted in this facility becoming the largest industrial building in El Paso. Menlo Logistics also leased a 265,000 SF distribution center in Santa Teresa. Expansions by Werner Ladder, Ryder Logistics and Stanco accounted for the only new construction in El Paso last year. One of the key trends that we followed throughout 2008 was the availability of larger (100,000 SF and above) Class A warehouse space in El Paso. With Menlo Logistics’s lease of the former Savanne distribution center, availability in this segment of the market has continued to be tight. There are several Class A spaces available in the 120,000 to 150,000 SF range, but few above that size. New vacancies may affect this in 2009, but larger logistics users will still face a limited supply next year, especially for companies looking to serve Foxconn from the Westside of El Paso. Another key trend we observed in 2008 was the movement of key maquiladora suppliers into Cd. Juarez---both for manufacturing companies and logistics providers. We expect this trend to ease in 2009 as security concerns south of the border continue to be an issue. Non-labor intensive operations may choose to keep or relocate their operations to El Paso, favoring security over proximity. TeamNAFTA expects industrial real estate activity in 2009 to be significantly lower than 2008. Once the U.S. economy is able to turn the corner, pent-up demand for manufacturing space in northern Mexico could change the situation quickly on both sides of the border (as discussed on the facing page). Despite the attractiveness of the El Paso/Cd. Juarez Borderplex for investment in the manufacturing sector, security concerns may drive investment to other border regions. Cd. Juarez, Mexico 2008 started off as an excellent year in Cd. Juarez with a significant amount of new investment coming from manufacturing companies and real estate developers. There were several significant projects that came to the city from both owners and users that demonstrated the predominance of Cd. Juarez within Mexico’s manufacturing industry. However, the 4th quarter brought the slowdown in the U.S. economy to Mexico and demand for industrial space across the city slowed significantly. The larger economic picture was not helped by the continued violence and instability occurring locally. | 
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Overall there was 7.2 million SF of industrial activity in Cd. Juarez, which is well above previous annual totals. There was also 4.4 million SF of new construction, bringing the total industrial supply to 58.4 million SF. Most of the new construction was in the southeastern industrial corridor. Except for 1.2 million SF of new construction for Foxconn in San Jeronimo, South of the Santa Teresa port of entry. The Foxconn project is the first phase of a much larger master planned development that is scheduled to be built over the next three years. Ultimately, this campus will be one of the largest manufacturing operations in Mexico and will open up an entirely new part of the Borderplex for future development. The top transactions for the year are listed on the following page, but some of the notable projects were VienTek and Wistron’s expansions, the Affinia Brake Parts lease and the relocation of Victory Packaging. With a mix of new companies entering Cd. Juarez, expansions and relocations, the industrial market had been very healthy through much of the year. However, only 60,000 SF of positive absorption came in ther 4th quarter outside of the Wistron and Foxconn projects. TeamNAFTA believes that there are significant opportunities for Cd. Juarez and Northern Mexico once the U.S. economy begins to rebound. Conversations with many of our customers over the last few months lead us to believe that firms will use the slowdown to evaluate cost-saving options and will continue to look at Mexico as the most logical choice for future investment due to labor and logistics. We expect to see a large number of site selection projects over the next six to twelve months and new investment starting in the second half of 2009 as companies reposition themselves for 2010. 
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