marketbeat el paso, texas - texas a&m university€¦ ·  · 2018-02-06reserve bank of dallas...

16
piresintl.com El Paso, Texas Industrial Q1 2018 MARKETBEAT Economic Indicators Market Indicators (Overall, All Property Types) Overall Net Absorption/Overall Asking Rent 4-QTR TRAILING AVERAGE Overall Vacancy Q1 17 Q1 18 12-Month Forecast El Paso Employment 311k 314k El Paso Unemployment 5.2% 4.3% U.S. Unemployment 4.7% 4.1% Q1 17 Q1 18 12-Month Forecast Vacancy 6.8% 2.7% Net Absorption (sf) 76k 372k Under Construction (sf) 104k 698k Average Asking Rent* $3.95 $4.10 *Rental rates reflect net asking $psf/year Economy El Paso, Texas and Cd. Juarez, Chihuahua is the largest border community on the planet and feels the heat of NAFTA’s negotiations as they unfold. In April, the administration commenced work on a portion of the promised Border Wall. The results are easy to predict. El Paso will remain one of the safest cities in the nation, just like the past decade. The wall / fence will do nothing to improve safety or the economy. The local economy continues its strong results with record occupancy, record low vacancy and increasing lease rates. These strengths mask the heighted concerns around NAFTA’s fate. The Federal Reserve Bank of Dallas states that El Paso’s employment grew at an annualized rate of 4.1%. Year to date data points to a cooling with a 2.3% rate projected with the predominant gains in professional and business services contributing 70% of the increases. Population growth from 2016 was a meager 0.4%, which brings to base to just under 850,000 residents. Trade figures are also encouraging in that trade has risen by $11.4 Billion, from $77.7B to $89.1B. Growth is associated with exports (43% of the total) increases of 26% year-over-year. These strong results place El Paso in the sixth position in the State of Texas. Another “mask” to the headwinds related to NAFTA is that new-orders-index in the manufacturing sector have decreased 3.6% already, from an index of 64.2 down to 61.9. Automobile sales have declined and this will also result in lower production numbers on the border. Mexican production of cars and light trucks has dropped by 300,000 vehicles, from 11.4M to 11.1M vehicles. Market Overview Aside from what was reported earlier, there is no new speculative construction has been announced in the latest quarter and to date only 436,500 SF has occurred this year. With over sixty million square feet of product in El Paso and Southern New Mexico, only two speculative buildings have been completed which total about two hundred fifty thousand square feet or less than a half percent of the stock in the region. These concerns resonate across the corporate structures too with an increased interest in short-term and or flexible leases which provide for cancellation clauses. A feature that was absent three years ago. Industrial and Net-Leased investments still command strong results on any metric from capitalization rates to prices on a per square foot basis. This is due to strong historical indicators and the reluctance of developers to bring more speculative product to market. Outlook The continued dearth of new construction, coupled with continued demand will propel rental rates further. These increases will support developer’s decisions to secure land positions for development and ultimately construct speculative industrial buildings to meet the demand. Land prices have remained relatively stable though the past two years and we expect that as parcels are sold that asking prices will eventually increase. The trend should develop before the fourth quarter of 2018. (*) (References) Federal Reserve Reports, Borderplex Business Barometer, The Wilson Institute, BBVA Bancomer, Wells Fargo, Banco de Mexico, trade journals, shelter operators and other sources. EL PASO, TEXAS INDUSTRIAL 2% 5% 8% 11% 14% 17% 2011 2012 2013 2014 2015 2016 2017 2018 Historical Average = 12.1% $3.00 $3.25 $3.50 $3.75 $4.00 -400 -200 0 200 400 600 800 1,000 2013 2014 2015 2016 2017 2018 Net Absorption, SF (THS) Asking Rent, $ PSF

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Page 1: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

El Paso, TexasIndustrial Q1 2018

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent4-QTR TRAILING AVERAGE

Overall Vacancy

Q1 17 Q1 18 12-Month Forecast

El Paso Employment 311k 314k

El Paso Unemployment 5.2% 4.3%

U.S. Unemployment 4.7% 4.1%

Q1 17 Q1 18 12-Month Forecast

Vacancy 6.8% 2.7%

Net Absorption (sf) 76k 372k

Under Construction (sf) 104k 698k

Average Asking Rent* $3.95 $4.10

*Rental rates reflect net asking $psf/year

EconomyEl Paso, Texas and Cd. Juarez, Chihuahua is the largest border community onthe planet and feels the heat of NAFTA’s negotiations as they unfold.

In April, the administration commenced work on a portion of the promisedBorder Wall. The results are easy to predict. El Paso will remain one of thesafest cities in the nation, just like the past decade. The wall / fence will donothing to improve safety or the economy.

The local economy continues its strong results with record occupancy, recordlow vacancy and increasing lease rates.

These strengths mask the heighted concerns around NAFTA’s fate.

The Federal Reserve Bank of Dallas states that El Paso’s employment grew atan annualized rate of 4.1%. Year to date data points to a cooling with a 2.3%rate projected with the predominant gains in professional and businessservices contributing 70% of the increases.

Population growth from 2016 was a meager 0.4%, which brings to base to justunder 850,000 residents.

Trade figures are also encouraging in that trade has risen by $11.4 Billion, from$77.7B to $89.1B. Growth is associated with exports (43% of the total)increases of 26% year-over-year. These strong results place El Paso in thesixth position in the State of Texas.

Another “mask” to the headwinds related to NAFTA is that new-orders-index inthe manufacturing sector have decreased 3.6% already, from an index of 64.2down to 61.9.

Automobile sales have declined and this will also result in lower productionnumbers on the border. Mexican production of cars and light trucks hasdropped by 300,000 vehicles, from 11.4M to 11.1M vehicles.

Market OverviewAside from what was reported earlier, there is no new speculative constructionhas been announced in the latest quarter and to date only 436,500 SF hasoccurred this year.

With over sixty million square feet of product in El Paso and Southern NewMexico, only two speculative buildings have been completed which total abouttwo hundred fifty thousand square feet or less than a half percent of the stockin the region.

These concerns resonate across the corporate structures too with anincreased interest in short-term and or flexible leases which provide forcancellation clauses. A feature that was absent three years ago.

Industrial and Net-Leased investments still command strong results on anymetric from capitalization rates to prices on a per square foot basis. This is dueto strong historical indicators and the reluctance of developers to bring morespeculative product to market.

OutlookThe continued dearth of new construction, coupled with continued demand will propel rental rates further. These increases will support developer’s decisions to secure land positions for development and ultimately construct speculative industrial buildings to meet the demand.

Land prices have remained relatively stable though the past two years and we expect that as parcels are sold that asking prices will eventually increase. The trend should develop before the fourth quarter of 2018.

(*) (References) Federal Reserve Reports, Borderplex Business Barometer, The Wilson Institute, BBVA Bancomer,Wells Fargo, Banco de Mexico, trade journals, shelter operators and other sources.

EL PASO, TEXAS INDUSTRIAL

2%

5%

8%

11%

14%

17%

2011 2012 2013 2014 2015 2016 2017 2018

Historical Average = 12.1%

$3.00

$3.25

$3.50

$3.75

$4.00

-400-200

0200400600800

1,000

2013 2014 2015 2016 2017 2018

Net Absorption, SF (THS) Asking Rent, $ PSF

Page 2: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

MARKETBEAT

El Paso, TexasIndustrial Q1 2018

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helpingoccupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial realestate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facilityservices (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & developmentservices, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow@CushWake on Twitter.

Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered frommultiple sources considered to be reliable. The information may contain errors or omissions and is presented without anywarranty or representations as to its accuracy.

Cushman & Wakefield | PIRES International5-B Butterfield Trail Blvd. El Paso, Texas 79906piresintl.com

For more information, contact:Brett C. Preston, SIOR, CCIM Managing PartnerTel: +1 915 843 [email protected]

Independently Owned and Operated / A Member of the Cushman & Wakefield Alliance

PROPERTY TYPE INVENTORY(SF)

YTD LEASING ACTIVITY

(SF)

OVERALL VACANCY RATE

YTDOVERALL NETABSORPTION

(SF)

UNDER CNSTR(SF)

YTD CNSTR COMPLETIONS

(SF)

OVERALL WEIGHTED AVG.

NET RENT

Warehouse/Distribution 44,685,912 671,195 2.4% 373,123 494,500 373,760 $4.10

Manufacturing 5,633,307 0 2.2% 0 203,162 0 $4.00

Office Service/Flex 1,780,182 102,000 3.1% 0 0 0 $5.50

High Tech 310,000 0 51.6% 0 0 0 $12.00

El Paso Total YTD 52,409,401 773,195 2.7% 372,123 697,662 373,760 $4.10

Key Lease Transactions Q1 2018

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

Warehouse/Distribution 150,000 UPS Renewal Butterfield Trail Industrial Park

Warehouse/Distribution 100,843 Redwood Logistics Direct East

Warehouse/Distribution 61,500 Impulso Renewal East

Warehouse/Distribution 39,194 GCS Renewal Butterfield Trail Industrial Park

Warehouse/Distribution 31,150 General Foam Renewal East

Warehouse/Distribution 26,763 Goodman Distribution Direct East

Warehouse/Distribution 25,600 SMD Direct Butterfield Trail Industrial Park

Warehouse/Distribution 25,400 TRANE Direct Butterfield Trail Industrial Park

Warehouse/Distribution 23,823 Yusen Logistics Renewal Butterfield Trail Industrial Park

Warehouse/Distribution 21,128 Automotive Lighting North America Direct East

Key Sales Transactions Q1 2018

PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET

Warehouse/Distribution 440,234 Janus Associates / Accel US Properties ±$11,005,850 / ±$25.00 Northeast

Warehouse/Distribution 65,000 BOILER8 LLC / A-1 Moving ±$3,300,000 / ±$50.76 East

Warehouse/Distribution 17,608 V & A Inc / Severo Hughston LLC $1,150,000 / $65.31 Northwest

Page 3: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

El Paso, TexasIndustrial Q4 2017

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent

4-QTR TRAILING AVERAGE

Overall Vacancy

Q4 16 Q4 1712-Month Forecast

El Paso Employment 312k 321k

El Paso Unemployment 5.1% 3.5%

U.S. Unemployment 4.7% 4.1%

Q4 16 Q4 1712-Month Forecast

Vacancy 6.8% 3.2%

Net Absorption (sf) -79k 321k

Under Construction (sf) 320k 237k

Average Asking Rent* $3.95 $4.10

*Rental rates reflect net asking $psf/year

EconomyEl Paso’s economic activity remained robust throughout Q4 2017. Employment rose to 321k in Q4 2017 from 312k Q4 2016. The Federal Reserve Bank of Dallas reported that the unemployment rate is now at 3.5%, which is lower than the State of Texas (3.8%) and the United States, 4.1%. El Paso’s unemployment has not been this low since 1969! El Paso’s unyielding economic growth is attributed to a strong labor force driven by the services industry and healthy maquiladora activity in Cd. Juarez, Mexico.

The Business-Cycle Index for El Paso continued to show improvement with a reported annualized growth rate of 3.7% in November. Q4 17 jobs increased to an annualized rate of 6.5%. Year-to- date (YTD), the city has added over 2,600 jobs with an annualize rate of 0.9%.The majority of job growth was powered by education and healthcare services, professional and business services, leisure and hospitality services. Related to this, the median price for a home in El Paso is $149,000 and the inventory of homes showed less than a 6-month supply. Q4 17 home sales exceeded 8,000 in November (annualized), above a 10% increase YTD.

While Mexico’s industrial production index showed a decrease of only 1.1% through October, U.S. industrial production increased by 3.4%, year-over-year in November. With an upbeat U.S. industrial sector, Mexico’s maquiladoras’s employment continues to rise at a steady pace. The Supply Institute of Management manufacturing reports the new orders component – an indicator of future conditions – remains robust at 64.0. Mexico’s IMMEX series reported Juarez, MX manufacturing employment totaled over 272,300 in Q4 17, a 4.4% increase from last year.

The drivers, no pun intended, for this growth are due to automotive and light-truck production which remains at 10.7 million vehicles through November (most recent data), down 9.4% from 2016. Related to this, is the 0.7% drop in vehicle sales in the U.S. from the previous year.

Market OverviewVacancy rates are at a historical low. Class A vacancies are still below 2% and lease rates have pressed above $4 per square foot per year (psf/yr), NNN. El Paso’s overall industrial vacancy rate for Q4 17 is a remarkable 3.2% compared to 6.8% in Q4 2017. Average asking rents rose $0.10 to $4.10 psf/yr, NNN. 287,000 sf combined speculative and built-to-suit construction was completed this quarter. There is 237,000 sf of speculative and built-to-suit under construction and due for early 2018 completion.

OutlookNAFTA is expected to be renegotiated. Mexico’s forecast expects a 2.0% GDP growth rate for 2018, which will mimic 2017. Investment spending, locally on the El Paso-Juarez border, has been sluggish due, in large part, to the uncertainties related to NAFTA negotiations. This has resulted in only a 0.2% projected growth rate in construction in Juarez, Mexico this year, which actually indicates a drop in spending when inflation is factored. Investment growth and future interest rate developments will be affected by the outcomes of NAFTA’s final outcome.

The relationship to auto sales and manufacturing are closely connected with nearly 50% of the maquiladoras in Juarez being automotive related.El Paso’s future is closely tied to that of Juarez, Chihuahua and the country of Mexico.

Uncertainty does more damage to business than just about anything. The completion of negotiations will do more to propel this economy than just about anything else.

(*) Federal Reserve Reports, Borderplex Business Barometer, The Wilson Institute, CoStar Group, trade journals, shelter operators and other sources.

EL PASO, TEXAS INDUSTRIAL

2%

5%

8%

11%

14%

17%

2011 2012 2013 2014 2015 2016 2017

Historical Average = 12.1%

$3.00

$3.25

$3.50

$3.75

$4.00

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016 2017

Net Absorption, SF (THS) Asking Rent, $ PSF

Page 4: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

MARKETBEAT

El Paso, TexasIndustrial Q4 2017

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helpingoccupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial realestate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facilityservices (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & developmentservices, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow@CushWake on Twitter.

Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered frommultiple sources considered to be reliable. The information may contain errors or omissions and is presented without anywarranty or representations as to its accuracy.

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Managing Partner

Tel: +1 915 843 8888

[email protected]

Independently Owned and Operated / A Member of the Cushman & Wakefield Alliance

PROPERTY TYPEINVENTORY(SF)

YTD LEASING ACTIVITY (SF)

OVERALL VACANCY RATE

YTDOVERALL NETABSORPTION(SF)

UNDER CNSTR(SF)

YTD CNSTR COMPLETIONS (SF)

OVERALL WEIGHTED AVG. NET RENT

Warehouse/Distribution 44,600,507 2,250,967 2.4% 767,850 136,542 286,718 $4.10

Manufacturing 5,633,307 368,569 7.5% 170,000 100,000 0 $4.00

Office Service/Flex 1,780,182 193,240 0% 193,200 0 0 $5.50

High Tech 310,000 0 51.6% 0 0 0 $12.00

El Paso Total YTD 52,323,996 2,812,776 3.2% 1,131,090 236,542 286,718 $4.10

Key Lease Transactions Q4 2017

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

Warehouse/Distribution 354,159 CEVA Renewal East

Office/Service 100,240 Pacific Union Financial Direct Northeast

Warehouse/Distribution 45,945 Olarte Direct East

Warehouse/Distribution 40,835 Capsonic Direct Northeast

Warehouse/Distribution 32,500 OLA Logistics Direct East

Warehouse/Distribution 29,061 Since Logistics Renewal Lower Valley

Warehouse/Distribution 18,160 Global Containers & Global Packaging Inc Sublease East

Warehouse/Distribution 15,600 GMS Ind. Renewal East

Warehouse/Distribution 12,841 Border West Expressway Renewal Northeast

Warehouse/Distribution 10,000 Aries Logistics Renewal Lower Valley

Key Sales Transactions Q4 2017

PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET

Warehouse/Distribution 395,000 Bond/STAG $32.50 Northeast

Warehouse/Distribution 100,000 Stagecoach/Bond $52.00 East

Warehouse/Distribution 100,000 Stagecoach/Transload $40.00 East

Page 5: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

El Paso, TexasIndustrial Q3 2017

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent

4-QTR TRAILING AVERAGE

Overall Vacancy

Q3 16 Q3 1712-Month Forecast

El Paso Employment 311k 319k

El Paso Unemployment 5.1% 4.3%

U.S. Unemployment 4.9% 4.4%

Q3 16 Q3 1712-Month Forecast

Vacancy 7.1% 5.0%

Net Absorption (sf) -293k 376k

Under Construction (sf) 0 436k

Average Asking Rent* $3.95 $4.00

*Rental rates reflect net asking $psf/year

EconomyThe complimentary regional economy for El Paso and Juarez continues to expand. Employment rose to 319k in Q3 2017 from 311k Q3 2016. Unemployment rate dropped to 4.3% in Q3 2017 from Q2 2016’s reading of 5.1%, which is currently below the Q3 2017 U.S. unemployment rate of 4.4%. El Paso’s economic growth has been solid and attributed to a strong labor force and driven by the services industry and the strong maquiladora activity in Cd. Juarez, Mexico.

According to the Federal Reserve Bank of Dallas, the majority of job growth in El Paso for 2017 has been powered by education and healthcare services, professional and business services; leisure and hospitality services equalized declines in the other nonfarm employment sectors. Year to date, the city has added approximately 3,400 jobs, nurturing an annualize rate of 1.7%.

Cd. Juarez, Mexico employment numbers have maintained their previously reported high mark (over 274,000 in Q2 2017). According to Mexico’s IMMEX, Juarez manufacturing employment continues to expand and wages remain globally competitive.

Market OverviewVacancy rates are historically low and Class A vacancies are in lockstep with those trends. This has continued to push lease rates to levels over $4.00 per square foot per (psf) year, NNN. During the quarter, overall industrial vacancy rate declined to 5% compared to 7.1% in Q3 2016. Average asking rents rose $0.05 to $4.00 psf. Class A vacancy levels remain below 2% with average asking rents well above the $4 mark. Approximately 436,000 sf of combined speculative and build-to-suit is under construction during the quarter. The two sites are on the opposite sides (east and west) of the city. Completion is expected to be ready for occupancy by Q1 2018. We expect to see more speculative developments to break ground in response to rising rents and dwindling supply of functional, Class A spaces in the market.

OutlookThe headwinds of the North American Free Trade Agreement (NAFTA), have impacted decisions all along the U.S. and Mexican border. While lease rates continue to rise in response to diminished quality industrial stock, the time to complete negotiations has increased. Experts with the WILSON Institute highlight that the problems with NAFTA have little to do with trade and a lot to do with foreign investment. NAFTA is the primary driver of certainty in the Mexican economy. The confidence in the agreement creates the framework upon which foreign investment continues from abroad. Automotive and Manufacturing will continue to source operations in Mexico and close to the U.S. border. On a broader scale, relationships between industries of medical, aerospace, automobiles, durable goods, and agriculture are interdependent and it is the fabric of NAFTA which holds them together. The “takeaway” is that these negotiations are expected to succeed.

(*) Federal Reserve Reports, Borderplex Business Barometer, The Wilson Institute, CoStarGroup, trade journals, shelter operators and other sources.

EL PASO, TEXAS INDUSTRIAL

2%

5%

8%

11%

14%

17%

2011 2012 2013 2014 2015 2016 2017

Historical Average = 12.1%

$3.00

$3.25

$3.50

$3.75

$4.00

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016 2017

Net Absorption, SF (THS) Asking Rent, $ PSF

Page 6: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining

our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is

among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset

services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ

Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit

www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy. Alliance firms are independently owned and operated.

El Paso, TexasIndustrial Q3 2017

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Managing Partner

Tel: +1 915 843 8888

[email protected]

Key Lease Transactions Q3 2017

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

Warehouse/Distribution 263,801 Cardinal Healthcare Renewal East

Warehouse/Distribution 144,000 Regal Beloit Corporation Renewal East

Warehouse/Distribution 80,000 First Texas Renewal East

Warehouse/Distribution 68,454 Since Logistics Lease East

Manufacturing 58,000 SDI Renewal East

Warehouse/Distribution 54,000 Visteon Lease East

Warehouse/Distribution 52,800 ZF Electronics Renewal East

Manufacturing 40,021 Essex Renewal Northeast

Warehouse/Distribution 40,000 Jichasa Distribution Lease East

Warehouse/Distribution 36,500 AutoPlus Lease Northeast

Warehouse/Distribution 36,000 Trinity Provision Enterprises Renewal Northeast

Warehouse/Distribution 35,984 Not Disclosed Lease East

Warehouse/Distribution 32,221 Not Disclosed Renewal Santa Teresa, NM

Warehouse/Distribution 25,000 Roane Transportation Lease East

Warehouse/Distribution 20,100 Insco Distribution Renewal East

Warehouse/Distribution 18,720 PGTex Renewal East

Warehouse/Distribution 16,108 Not Disclosed Renewal Santa Teresa, NM

Warehouse/Distribution 16,020 Rapid Fire Renewal East

Warehouse/Distribution 14,016 Border States Industries Lease Northeast

Warehouse/Distribution 13,850 Supply Technologies Renewal Northeast

Warehouse/Distribution 9,840 Wurth Adams Lease East

Warehouse/Distribution 9,600 Not Disclosed Renewal East

Independently Owned and Operated / A Member of the Cushman & Wakefield Alliance

PROPERTY TYPE INVENTORY(SF)

YTD LEASING ACTIVITY (SF)

OVERALL VACANCY RATE

YTDOVERALL NETABSORPTION

(SF)

UNDER CNSTR(SF)

YTD CNSTR COMPLETIONS (SF)

OVERALL WEIGHTED AVG.

NET RENT

Warehouse/Distribution 44,313,789 1,391,627 4.4% 546,955 336,218 0 $4.00

Manufacturing 5,633,307 351,249 7.8% 170,000 100,000 0 $3.95

Office Service/Flex 1,780,182 93,000 3.6% 93,000 0 0 $5.50

High Tech 310,000 0 51.6% 0 0 0 $12.00

El Paso Total 52,037,278 1,835,876 5.0% 809,955 436,218 0 $4.00

Page 7: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

El Paso, TexasIndustrial Q1 2017

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent

4-QTR TRAILING AVERAGE

Overall Vacancy

Q1 16 Q1 1712-Month Forecast

El Paso Employment 306k 315.5k

El Paso Unemployment 5.1% 5.1%

U.S. Unemployment 4.9% 4.8%

Q1 16 Q1 1712-Month Forecast

Vacancy 8.7% 6.8%

Net Absorption (sf) 1.6M 76k

Under Construction (sf) 0 104k

Average Asking Rent* $3.90 $3.95

*Rental rates reflect net asking $psf/year

EconomyThe regional economy for El Paso and Juarez finished 2016 on a very high note. Employment rose from 306k in Q4 2016 to 315.5k Q1 2017. Unemployment rate remained unchanged from Q4 2016 at 5.1%, which is above the Q1 2017 national unemployment rate of 4.8%. El Paso’s economic growth remains solid and partially attributed to the strong maquiladora activity in Juarez

According to the Federal Reserve Bank of Dallas, early Q1 2017 job growth in El Paso was mixed. Professional and business services, financial activities and other services posted employment gains, equalizing declines in the other nonfarm employment sectors. Overall, El Paso posted an annualized growth rate of 0.9%.

Mexico’s employment numbers continue to impress and according to Mexico’s IMMEX, Juarez manufacturing employment now totals over 266,000 in December of 2016, which reflects an increase of 7.5% over 2015.

Market OverviewEl Paso continues their strong industrial leasing results and there is still no speculative building announced. This has driven down Class A vacancies to unprecedented levels below 2% with average asking rents at $4.00+ per square foot per year. Q1 2017 overall industrial vacancy rate is 6.8% compared to 8.7% in Q1 2016. In Q1 2017 the average asking rents remain $3.95 per square foot (SF) per year, while “street quotes” continue to increase by about $0.05/SF per quarter.

Outlook2017 brought in a new United States presidential administration that has promised to change the special relationship (NAFTA) which exists between the U.S., Mexico and Canada. In fact, trade relationships for every country are likely under review. The prognosis for NAFTA, while far from certain, is expected to change market dynamics only slightly and slowly, at that. Nonetheless, Mexico offers manufacturers distinct advantages which would offset the proposed “border tax”. We expect that manufacturing in Mexico will remain globally competitive. Recent reports indicate that comparable savings to U.S. based operations are near 82%* less. Also, foreign-direct-investment (FDI) continues to increase at a healthy pace throughout Mexico.

With over a half-trillion dollars per year of trade between Mexico and the U.S., the bilateral economic partnership has rightly stressed secure and free trade between the two countries with good results. Chihuahua, Mexico has now continued to develop a growing educated middle class. The economy has shifted to include high-skilled manufacturing as evident with the strength and breadth of the automotive and aviation industries.

(*) Federal Reserve Reports, Wilson Institute, trade journals, shelter operators and other sources.

EL PASO, TEXAS INDUSTRIAL

2%

5%

8%

11%

14%

17%

2011 2012 2013 2014 2015 2016 2017

Historical Average = 12.1%

$3

$4

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016 2017

Net Absorption, SF (THS) Asking Rent, $ PSF

.00

.00

$3.25

$3.50

$3.75

Page 8: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining

our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is

among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset

services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ

Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit

www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy. Alliance firms are independently owned and operated.

El Paso, TexasIndustrial Q1 2017

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Managing Partner

Tel: +1 915 843 8888

[email protected]

Key Lease Transactions Q1 2017

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

Manufacturing 187,200 Handguards Inc Renewal East

Warehouse/Distribution 96,000 Harman Becker Renewal East

Warehouse/Distribution 60,000 Morrison Express Renewal East

Warehouse/Distribution 48,000 APEX Diversified Solutions Renewal East

Warehouse/Distribution 48,000 Escoto U.S. Customs Brokers Renewal Lower Valley

Warehouse/Distribution 42,000 Logix Expert Logistics Sublease East

Manufacturing 40,000 Flowers Baking Company New Lower Valley

Manufacturing 40,000 PSC Fabricating Renewal Central

Warehouse/Distribution 39,104 EMO Trans Renewal Northeast

Warehouse/Distribution 38,021 Aries Global Logistics New Northeast

Warehouse/Distribution 24,000 IBCA Logistics Renewal East

Warehouse/Service Center 20,000 Not disclosed New Central

Warehouse/Distribution 18,000 Not disclosed New East

Key Sales Transactions Q1 2017

PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET

Warehouse/Distribution 270,846 Leviton/Plexxar Not disclosed Northwestern

Warehouse/Distribution 173,563Royal St John LLC/

Durazno Real Estate InvestmentsNot disclosed East

Warehouse/Distribution 100,560 Stonelake Capital Partners/RNDC Not disclosed Northeast

Service Center 93,023 1575 North Resler Drive LLC/Plexxar Not disclosed Northwestern

Independently Owned and Operated / A Member of the Cushman & Wakefield Alliance

PROPERTY TYPE INVENTORY(SF)

YTD LEASING ACTIVITY (SF)

OVERALL VACANCY RATE

YTDOVERALL NETABSORPTION

(SF)

UNDER CNSTR(SF)

YTD CNSTR COMPLETIONS (SF)

OVERALL WEIGHTED AVG.

NET RENT

Warehouse/Distribution 44,313,789 76,000 5.8% 76,000 104,000 0 $4.00

Manufacturing 5,633,307 0 12.3% 0 0 0 $3.90

Office Service/Flex 1,780,182 0 8.9% 0 0 0 $5.25

High Tech 310,000 0 51.6% 0 0 0 $12.00

El Paso Total 52,037,278 76,000 6.8% 76,000 104,000 0 $3.95

Page 9: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

El Paso, TexasIndustrial Q4 2016

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent

4-QTR TRAILING AVERAGE

Overall Vacancy

Q4 15 Q4 1612-Month Forecast

El Paso Employment 306k 312k

El Paso Unemployment 5.2% 5.1%

U.S. Unemployment 5.0% 4.8%

Q4 15 Q4 1612-Month Forecast

Vacancy 11.6% 6.8%

Net Absorption (sf) 390k -79k

Under Construction (sf) 0 320k

Average Asking Rent* $3.75 $3.95

*Rental rates reflect net asking $psf/year

EconomyThe regional economy for El Paso and Juarez closed the year on a

high note. The United States Federal Reserve stated that nonfarm

employment grew by 2.4% in November and that employment in

Juarez’s manufacturing sector was up 5.4% from the previous year

for a projected total of 263,000 jobs.

El Paso job growth for 2016 passed 5,000 jobs with over 2,000 of

those jobs related to Leisure and Hospitality, a 6.3% annual

increase.

Vehicle manufacturing will near 18 million vehicles up from 12 million

completed in Q3 2016. As often stated, vehicle sales are closely

connected to the local market economy since almost half of the

maquiladoras in Cd. Juarez, Mexico are auto-related.

Market OverviewEl Paso’s industrial overall vacancy rate fluctuated throughout 2016

and ended the year at 6.8%.

Speculative construction has not commenced, and the dearth of

Class A space, which has hovered in the 2% range, will continue to

drive rents toward an average $4.00 per square foot (PSF) NNN

threshold. Average asking rents increased to $3.95 PSF with higher

rates ($4.25 PSF) on the true Class A product.

OutlookThe surprise election results in the U.S. have created a challenge

which economists and business executives alike had not anticipated

or calculated. Most industry leaders will closely monitor how the

President Elect proceeds with his cabinet appointments to ascertain

how policies may change over the next four years.

The economies of the border communities are complex and deeply

intertwined. Local industry executives often treat El Paso-Juarez as

one city and one economy. On a broader scale, the manufacturing

relationships between every manufacturing sector from medical,

aerospace, automobiles, durable goods, agriculture and more, are

immensely interdependent and NAFTA is the fabric which holds

them all together. Any changes to this agreement could and likely

will have far-reaching ramifications on thousands of livelihoods in the

United States, Mexico and Canada.

After meetings with industry leaders in both Mexico and the U.S., the

takeaway is that the general outlook is an optimistic one. It is

expected that this conservative administration will do more for

industry as they remove unnecessary legislation and regulation and

will exercise a pragmatic treatment toward the review of NAFTA and

the campaign prognostications related to the physical border

boundaries between the United States and Mexico.

EL PASO, TEXAS INDUSTRIAL

2%

5%

8%

11%

14%

17%

2011 2012 2013 2014 2015 2016

Historical Average = 12.3%

$3

$4

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016

Net Absorption, SF (thousands) Asking Rent, $ PSF

Page 10: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining

our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is

among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset

services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ

Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit

www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy. Alliance firms are independently owned and operated.

El Paso, TexasIndustrial Q4 2016

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Managing Partner

Tel: +1 915 843 8888

[email protected]

Key Lease Transactions Q4 2016

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

12375 Pine Springs 187,200 CEVA Logistics Renewal East

12112-12124 Rojas 160,519 Automotive Lighting Renewal East

19 Leigh Fisher 110,000 Trans-Expedite Short Term Lease Northeast

9560 Joe Rodriguez 77,495 Space Border Logistics Renewal Lower Valley

11970 Pellicano 56,000 Harman Kardon Renewal East

11970 Pellicano 48,000 Toyota Lease East

30 Spur 45,315 Salter Labs Renewal Northeast

12773 Gateway W. 40,000 Victory Packaging Renewal East

9660 Joe Rodriquez 38,400 EP Logistics Renewal Lower Valley

12 Zane Grey 36,800 Temp Glass Lease Northeast

9615 Plaza Circle 25,311 Indel Foods Expansion Lower Valley

2800 Airport 24,110 RL Logistics Lease Santa Teresa, NM

27 Spur 23,000 GSA Lease Northeast

12430 Mercantile 22,320 Philips Lighting Renewal East

9580 Joe Rodriquez 21,850 Renewal Lower Valley

10808 Notus 18,000 H & R Logistics Lease East

29 Butterfield Trail 16,400 Express Office Products Renewal Northeast

43 Butterfield Trail 16,000 Escogo Lease Northeast

30 Spur 15,000 Salter Labs Expansion Northeast

9620 Joe Rodriguez 14,000 Transworld Logistics Lease Lower Valley

1480 Common 10,800 CF Heller Lease East

Key Sales Transactions Q4 2016

PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET

1121 Larry Mahan 23,716 Not disclosed / Francis Properties Not disclosed East

9100 Mayflower 16,612 F. Najera / Francis Properties $536,568 / $32 East

1900 Appaloosa 14,285 Amrose Family LLC / Bht 3 Properties LLC Not disclosed Sunland Park, NM

Independently Owned and Operated / A Member of the Cushman & Wakefield Alliance

PROPERTY TYPE INVENTORY(SF)

YTD LEASING ACTIVITY (SF)

OVERALL VACANCY RATE

YTDOVERALL NETABSORPTION

(SF)

UNDER CNSTR(SF)

YTD CNSTR COMPLETIONS (SF)

OVERALL WEIGHTED AVG.

NET RENT

Warehouse/Distribution 44,313,789 4,142,206 5.8% 1,822,960 320,000 215,000 $4.00

Manufacturing 5,633,307 697,749 12.3% 174,129 0 120,000 $3.90

Office Service/Flex 1,780,182 116,350 8.9% 19,343 0 110,000 $5.25

High Tech 310,000 0 51.6% -100,000 0 0 $12.00

El Paso Total 52,037,278 4,956,305 6.8% 1,916,432 320,000 445,000 $3.95

Page 11: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

El Paso, TexasIndustrial Q3 2016

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent

4-QTR TRAILING AVERAGE

Overall Vacancy

Q3 15 Q3 1612-Month

Forecast

El Paso Employment 304k 311k

El Paso Unemployment 5.1% 4.7%

U.S. Unemployment 5.2% 4.9%

Q3 15 Q3 1612-Month

Forecast

Vacancy 12.1% 7.1%

Net Absorption (sf) 684k -294k

Under Construction (sf) 0 0

Average Asking Rent* $3.75 $3.95

*Rental rates reflect net asking $psf/year

EconomyEl Paso’s economy contracted slightly in Q3 2016 with employment

at 311k. (-0.5%) decrease was reported by the Federal Reserve

Bank of Dallas, El Paso Sector, Business Cycle Index. This

contraction has resulted in a growth rate of 1.8% in Q3 2016

compared to 2.3% growth recorded Q2 2016.

Employment growth slowed and the Q3 unemployment rate reported

4.7%. The strongest sectors remain with construction, mining and

natural resources. A paltry 200 jobs have been added since Q2

2016. According to the Federal Reserve Bank of Dallas report, year-

to-date job increases total in excess of 2,000 jobs.

International trade flows typically increase this time of year. Vehicle

manufacturing increased to almost 12 million vehicles in Q3 2016

from 11.8 million in Q2 2016. However U.S. sales declined by

700,000 vehicles from the prior year. Vehicle sales are closely

connected to the local market economy since almost half of the

maquiladoras in Cd. Juarez, Mexico are auto-related. These trends

will impact future activity on both sides of the border.

Market Overview

El Paso’s industrial overall vacancy rate fluctuated throughout 2016;

the 8.7% rate reported Q1 fell to 6.6% at mid-year and then rose to

7.1% at Q3. A considerable portion of the available space is

represented in two buildings that became vacant, Leviton and Mount

Franklin Foods. However, this Q3 vacancy rate of 7.1% represents a

drastic decline from 13.1% reported last year at this time.

Class A vacancy remained near 2%. Average asking rents have held

at or near $3.90 per square foot (PSF) with higher rates ($4.25 PSF)

on the true Class-A product.

OutlookThe outlook continues to be strong, but headwinds have built to a

point that they cannot be ignored. El Paso | Juarez is a production

and cost center for manufacturing and distribution and the national

and global concerns resonate quickly in this region. Leases are of

shorter terms and requirements are more “fluid” than in many parts

of the country. The previously stated absorption strength coupled

with the dearth of construction helps to paint a bright picture, but not

one that can be taken as a forlorn conclusion just yet.

Cd. Juarez, Chihuahua, Mexico remains one of the most competitive

manufacturing communities on the planet. Many industry sectors

enjoy cost advantages over every country, including China. Many

industries that had set up operations in China and the Far East have

moved back to Mexico and Juarez in particular. That strength has

benefited El Paso in exponential ways. The Juarez unemployment

rate has remained near 5.5%, which indicates that wage pressures

will be manageable.

EL PASO, TEXAS INDUSTRIAL

2%

5%

8%

11%

14%

17%

2011 2012 2013 2014 2015 2016

Historical Average = 12.5%

$3

$4

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016

Net Absorption, SF (thousands) Asking Rent, $ PSF

Page 12: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining

our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is

among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset

services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ

Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit

www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy. Alliance firms are independently owned and operated.

El Paso, TexasIndustrial Q3 2016

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Managing Partner

Tel: +1 915 843 8888

[email protected]

Key Lease Transactions Q3 2016

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

14 Butterfield Trail 80,269 Keytronic Renewal Northeast

7730 Market Center 80,000 Hewlett Packard Enterprise Renewal West

9615 Plaza Circle 57,985 Indel Foods Renewal Lower Valley

11970 Pellicano 56,000 Bosch Renewal East

28 Walter Jones 39,351 Nippon Express Renewal Northeast

2800 Airport Rd. 32,000 Rogers Foam Renewal Santa Teresa, NM

1450 Pullman 32,000 Bosch Renewal East

7730 Trade Center 24,000 AT & T Renewal West

12273 Gateway West Blvd. 24,000 Trans Maq Lease East

11500 Rojas 21,500 Iron Mountain Renewal East

26 Walter Jones 10,400 Selected Brands Lease Northeast

Key Sales Transactions Q3 2016

PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET

27 Concord 36,000 Not disclosed Not disclosedNortheast

Independently Owned and Operated /

A Member of the Cushman & Wakefield Alliance

PROPERTY TYPE INVENTORY

(SF)

YTD USER SALES

ACTIVITY

(SF)

YTD LEASING

ACTIVITY (SF)

OVERALL

VACANCY RATE

YTD

OVERALL NET

ABSORPTION

(SF)

UNDER CNSTR

(SF)

YTD CNSTR

COMPLETIONS

(SF)

OVERALL

WEIGHTED AVG.

NET RENT

Warehouse/Distribution 44,313,789 86,000 3,801,744 6.2% 1,801,652 0 215,000 $4.00

Manufacturing 5,487,009 0 660,949 12.6% 174,129 0 120,000 $3.90

Office Service/Flex 1,780,182 0 112,600 8.9% 19,343 0 110,000 $5.25

High Tech 210,000 0 0 28.6% 0 0 0 $9.00

El Paso Total 51,790,980 86,000 4,575,293 7.1% 1,995,124 0 445,000 $3.95

Page 13: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

Industrial Snapshot 2Q 2016El Paso, Texas

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Classes)

Overall Net Absorption/Overall Asking Rent

4Q TRAILING AVERAGE

Overall Vacancy

2Q 25 2Q 1612-Month

Forecast

El Paso Employment 301k 309k

El Paso Unemployment 5.2% 4.8%

U.S. Unemployment 5.4% 4.9%

2Q 25 2Q 1612-Month

Forecast

Vacancy 12.8% 6.6%

Net Absorption (sf) 194k 712k

Under Construction (sf) 0 0

Average Asking Rent* $3.70 $3.95

*Rental rates reflect net asking $psf/year

Economy

El Paso’s economy is still expanding. The Federal Reserve

Bank, El Paso Sector reported growth of 2.3% in the El Paso

Business Cycle Index, which is a decline by almost half of the

previous 4.5%. Employment growth slowed to 0.7%, down also

by almost half of the previous reported 1.5%.

Employment by growth sector marked the strongest gains in

construction, mining and natural resources at a rate of 11%. This

contrasts with decline in leisure and hospitality which contracted

by 8.6% in 2Q 2016 from a previously reported 14%. According

to the Federal Reserve Bank of Dallas report, year-to-date job

increases totaled in excess of 1,800 new jobs with trade, utilities

and transportation representing more than 50% of the gains.

These industries remain El Paso’s most robust sectors.

International trade flows slowed by 3.5% to an adjusted $75

billion in the most recent month. The last monthly reports had

trade at or near $77.0 billion and $77.5 billion, respectively.

Market Overview

The mid-year mark of 2016 remains strong and leasing activity

continues to deliver the strongest results in many years. As

previously stated, there are two years of positive absorption on

the books coupled with the previously reported 9,000 plus jobs

added throughout 2015 and 1,800 jobs added this quarter are

indicators of a growing economy. El Paso’s industrial overall

vacancy rate has remained below 9% despite two significant

vacancies on the market. The overall vacancy rate reduced

nearly by half from 12.8% in 1Q 2015 to 6.6% in 2Q 2016. Class

A vacancy remains near or below 2%, the strongest tenancy

performance in nearly a decade. Average asking rents continued

to increase and reported $3.95 per square foot at mid-2016.

Year-to-date overall net absorption totaled nearly 2.3 million

square feet which is almost double the absorption recorded

during all of 2015.

Industry sectors remain strong, but somewhat guarded. The

standing apparent consensus amongst plant and warehouse

managers remains upbeat, but all voice or indicate concerns

over the presidential election later this year.

The contributions that Chihuahua, Mexico and Juarez, Mexico

provide to the economy of El Paso, Texas are significant and not

enough can be said as to how their health dictates ours. They

have almost four years of positive growth and the construction to

provide more product continues its’ trend.2%

5%

8%

11%

14%

17%

2010 2011 2012 2013 2014 2015 2016

EL PASO, TEXAS INDUSTRIAL

Historical Average = 13%

$3

$4

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016

Net Absorption, SF (thousands) Asking Rent, $ PSF

Page 14: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for

occupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms with

revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global

occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and

valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy.

Industrial Snapshot 2Q 2016El Paso, Texas

MARKETBEAT

Key Lease Transactions 2Q 2016

PROPERTY SF TENANT SUBMARKET

15 Leigh Fisher 222,486 Treehouse Private Brands Northeast

41 Butterfield Trail Blvd. 153,000 Mahle Northeast

9600 Pan American 124,000 Transload Lower Valley

9560 Plaza Circle 80,000 Champlain Cable Lower Valley

1721 Addison 78,000 Tire Club East

1325 Pendale 73,000 Kuehne & Nagel East

425 Pan Amercian 60,000 ASO Lower Valley

12220 Rojas 50,000 Honeywell East

6750 N. Desert 50,000 CSC Sugar West

12120 Esther Lama 32,000 Sumitomo East

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Manager Partner

Tel: +1 915 843 8888

[email protected]

Page 15: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

piresintl.com

Industrial Snapshot Q1 2016El Paso, Texas

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Classes)

Overall Net Absorption/Overall Asking Rent

4Q TRAILING AVERAGE

Overall Vacancy

Q1 2015 Q1 201612-Month

Forecast

El Paso Employment 299.5k 306.6k

El Paso Unemployment 5.4% 5.5%

U.S. Unemployment 5.6% 4.9%

Q1 2015 Q1 201612-Month

Forecast

Vacancy 13.1% 8.7%

Net Absorption (sf) 12k 1.6M

Under Construction (sf) 0 0

Average Asking Rent* $3.70 $3.90

*Rental rates reflect net asking $psf/year

EconomyThe Federal Reserve Bank, El Paso Sector reported

growth of 4.5% in the El Paso Business Cycle Index.

Employment by growth sector marked gains in every

sector except Trade, Transportation and Utilities which

contracted by a mere 5% while Leisure and Hospitality

raced ahead by 27%.

Trade flows deviated in the 1.5% to 2.0% range, with the

general trend upwards of close to $75 billion.

El Paso’s industrial overall vacancy rate decreased to

8.7% from 13.1% reported this time last year. Class A

vacancy fell below 2%, the strongest tenancy performance

in nearly a decade. Average asking rents increased from

$3.70 per square foot (psf) in first quarter 2015 to $3.90

psf in first quarter 2016.

Market OverviewThe first quarter of 2016 picked up where 2015 left off.

Leasing activity was on pace to deliver some of the

strongest results in over a decade. Nearly two years of

positive absorption on the books coupled with the

previously reported 9,000 plus jobs added throughout 2015

are indicators of what is expected in the near-term.

Industry sectors are all strong and the general consensus

amongst plant and warehouse managers is upbeat. There

is concern about the presidential elections and how the

economy would respond, but almost without exception

inventories remain healthy, demand for finished product is

strong and the pipeline for research and development,

while guarded, continues to grow.

Chihuahua and Juarez continue to contribute to the

positive results in El Paso. These markets are in their third

year in the positive growth territory with extensive build-to-

suit construction and speculation continuing.

5%

8%

10%

13%

15%

2010 2011 2012 2013 2014 2015 Q1 16

EL PASO, TEXAS INDUSTRIAL

Historical Average = 13%

$3

$4

$5

-400

-200

0

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 Q1 16

Net Absorption, SF (thousands) Asking Rent, $ PSF

Page 16: MARKETBEAT El Paso, Texas - Texas A&M University€¦ ·  · 2018-02-06Reserve Bank of Dallas reported that the unemployment rate is now at ... MARKETBEAT El Paso, Texas ... MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for

occupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms with

revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global

occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and

valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy.

Industrial Snapshot Q1 2016El Paso, Texas

MARKETBEAT

Key Lease Transactions Q1 2016

PROPERTY SF TENANT SUBMARKET

9600 Pan American 420,000 Electrolux Lower Valley

1440 Don Haskins 419,821 TORO East

1550 Northwestern 360,000 Becton Dickenson West

48 Walter Jones 353,611 PENSKE Northeast

465 Industrial 215,000 MCS Industries Santa Teresa, NM

1601 Northwestern 120,000 Schneider Electric West

1851 Resler 110,000 ADP West

12435 Rojas 108,000 Yazaki East

465 Pan American 96,000 Links Logistics Lower Valley

32 Spur 85,000 Columbus Industries Northeast

12429 Rojas 60,000 Coca Cola East

Key Sales Transactions Q1 2016

PROPERTY SF SELLER/BUYER SUBMARKET

465 Industrial 215,000 MCS Industries/IDI Gazeley Santa Teresa, NM

19 Leigh Fisher 120,000 Covington Group/Allstate Northeast

9 Butterfield Trail Blvd. 96,000 Covington Group/Allstate Northeast

12 Zane Grey St. 68,800 Covington Group/Allstate Northeast

22 Spur 50,000 Wahlner EXPACE/Stonelake Capital Partners Northeast

Cushman & Wakefield | PIRES International

5-B Butterfield Trail Blvd.

El Paso, Texas 79906

piresintl.com

For more information, contact:

Brett C. Preston, SIOR, CCIM

Manager Partner

Tel: +1 915 843 8888

[email protected]