El Paso is Beneficiary of Manufacturing Moves to Mexico

EL PASO, TX—In response to rapidly increasing demand for industrial space, VanTrust Real Estate LLC has launched a 59-acre spec logistics park. Phase I of the logistics park, which is VanTrust’s first El Paso project, consists of four buildings totaling more than 514,135 square feet. Two additional buildings totaling 480,504 square feet will be constructed during Phase II of the project, bringing the total to nearly 1 million square feet. The park will be located between Mercantile Avenue and Paseo Del Este Boulevard, bordered on the east by the new Bill Burnett Drive.

“We’ve seen tremendous demand for industrial property in El Paso over the past few years, which creates a great opportunity for VanTrust to enter this dynamic marketplace with one of the region’s largest spec industrial projects,” said Josh Meredith, director of development at VanTrust. “We’re confident that the city’s geographic benefits and Texas’ business-friendly environment will continue positioning El Paso as a destination of choice for industrial customers.”

El Paso is traversed by Interstate 10, the fourth-longest interstate in the nation that extends from the Pacific to Atlantic oceans. Additionally, the region is served by rail lines, two international airports and five international crossings between El Paso and Mexico. And the logistics development is located within five miles of the Zaragoza Bridge, one of the busiest international points of commercial entry.

“Its location across the border from Juarez is very beneficial,” Meredith tells GlobeSt.com. “A lot of manufacturing companies are moving out of China, and this increasing exodus will benefit manufacturing in Mexico, which in turn benefits El Paso with vacancy rates hovering around 3%.”

Due to this strategic geographic location, more than 300 Fortune 500 corporations have a presence in the region. These companies also benefit from being located within Foreign Trade Zone number 68, which encompasses more than 3,400 acres of El Paso and El Paso County. This designation provides tax and duty exemptions on eligible inventory.

“There has never been a more dynamic time for the industrial market in El Paso,” said Bill Caparis, senior vice president in CBRE’s industrial and logistics practice in El Paso. “We’re seeing industrial occupancy rates at 96.5% as global brands realize the benefits of having a location along the US-Mexico border. Much of this demand is driven by a desire for companies to protect their supply chains and reduce taxes by reshoring their operations from China to North America, particularly Mexico, along with growing consumer reliance on e-commerce retailers. El Paso is ideally positioned to serve as a strategic international distribution point for those companies.”

Indeed, as one of the world’s largest border communities, El Paso is experiencing record-breaking demand for industrial space, with more than 182,000 square feet of space absorbed during the first quarter of 2020. Approximately 100,600 square feet of industrial space was completed and 652,189 square feet of industrial space was under construction during the same timeframe, according to CBRE. The first quarter closed with 2.9 million square feet of industrial space available for lease at 66 industrial properties. Most of these properties have less than 30,000 square feet of space available, with only nine properties offering an average lease size range of 40,000 square feet to 1 million square feet.

Phase I of VanTrust’s logistics park is slated for completion in early 2021. Phase II will commence upon completion of the first phase.

“We are in the infancy stages so no tenants to date but COVID is acting as the great accelerator,” Meredith tells GlobeSt.com. “E-commerce was popular before but in the last few months, with people relying more on e-commerce, leasing has picked up during this time.”