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 Click here to view the full 2010 First Quarter Market Summary for El Paso, Texas and Cd. Juarez, Mexico.
El Paso, Texas
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Total Market Size:
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54,270,000 SF |
| Total Activity: |
695,000 SF |
| Gross Absorption: |
333,000 SF |
| Net Absorption: |
-884,000 SF |
| New Construction: |
40,000 SF |
| Industrial Vacancy: |
15.6% |
El Paso’s industrial market continues to contract and the vacancy rate increased significantly in the 1st quarter. The largest component of that increase was the closure of Jones Apparel’s distribution center in Socorro. The 860,000 SF plant is one of the largest in El Paso and now the largest available Class “A” distribution space along the U.S./Mexico border. There was an additional 250,000 SF of space coming on the market with Excel Logistics vacating a warehouse in Butterfield Trail and Yazaki closing their warehouse in the Vista del Sol submarket.
While these vacancies had the largest impact on the market, there were several companies expanding their operations in El Paso. Express Point is relocating from Butterfield Trail into a 96,000 SF facility and Emerson moved into a 75,000 SF building in Vista del Sol, coming out of space with a 3PL in the same submarket. The remainder of the market activity was smaller operations renewing leases or taking on incremental space.
Overall the industrial market continues to soften as demand from warehouse operations and suppliers supporting operations in Juarez appear to be at least 6 to 12 months off. As expected, the first half of 2010 looks to be slow and a repeat of 2009 on this side of the border. However, there are no new vacancies on the horizon for the 2nd quarter and we believe that the market is at the bottom of the cycle.
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Butterfield Trail continues to be the submarket with the highest vacancy and the Westside has the lowest. With the exception of the Jones Apparel building in Socorro, the market for Class “A” distribution space over 200,000 SF is very tight. As the economy rebounds in the 2nd half of 2010 this will pose a problem for new 3PL requirements in El Paso.
Cd. Juarez, Mexico
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Total Market Size:
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58,956,000 SF |
| Total Activity: |
729,000 SF |
| Gross Absorption: |
507,000 SF |
| Net Absorption: |
-327,000 SF |
| New Construction: |
100,000 SF |
| Industrial Vacancy: |
13.6% |
The industrial real estate market in Cd. Juarez continues to weaken according to the market indicators, with the vacancy rate climbing and low levels of absorption. However manufacturing activity is showing signs of improvement and employment is rebounding. No major operations left Cd. Juarez in the last three months but several companies did downsize. The lack of a clear rebound in the real estate market is likely to continue for at least the next 6 to 12 months as currently un-productive “shadow vacancies” are absorbed.
Shadow vacancy represents manufacturing space that is not currently being used for production purposes but is not on the market for lease and, therefore does not show up in the official vacancy number. This space needs to be put back into productive use before companies start looking for additional manufacturing space and new demand is generated in the market. Assuming the global economy continues to improve it could be another 6 to 12 months before the shadow vacancy is absorbed and any real demand for space is generated.
On top of the high amount of shadow vacancies across the market, new investment continues to be limited due to security concerns. There was only one new company entering the market inthe 1st quarter.
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Fagerdala World Foams leased 95,000 SF in the Centro Industrial Juarez and will start a foam packaging operation this spring. Werner Ladder also leased an additional 59,000 SF in the Northgate Park. All of the other absorption was the result of companies relocating from one building to another, either taking advantage of lower lease rates or downsizing operations. This is consistent with trends throughout 2009.
Overall, new vacancies outpaced absorption by 327,000 SF, driving the vacancy rate up slightly to 13.6%. TeamNAFTA is currently tracking 100 available industrial buildings across Cd. Juarez and we do not foresee that this situation will change significantly in 2010. As we anticipated at the end of last year there is a growing pipeline of projects looking at Northern Mexico, but the continued security situation across the Border Region may keep that demand bottled up for the near future.
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