Unpredictable shifts in U.S. policy on trade across the Texas-Mexico border could imperil imports and exports that reached $540 billion in 2024 and spurred a sharp increase in industrial development, according to a new report from Savills.
The report notes that the border spans 1,254 miles, four metropolitan statistical areas (MSAs) and various ports of entry. Trade occurs through eight Texas border cities -- El Paso, Ysleta, Tornillo, Laredo, Hidalgo, Progresso and Brownsville – and the region has a “pipeline of speculative construction rivaling the nation’s fastest growing hubs,” the report said. Trade through these gateways has increased 40% over just five years.
“However, with shifting trade policies, the region faces an inflection point that could alter its near-term trajectory,” it warned. “At the same time, the upcoming renegotiation of the USMCA [United States Mexico Canada Agreement] in July 2026 is creating additional uncertainty.”
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The I-35 corridor, which runs from Laredo to Duluth, MN, forms the spine connecting markets like El Paso, Laredo, McAllen, and Brownsville, contributing to their growth as manufacturing and logistics hubs. Each has seen significant growth in truck and rail crossings in recent years between the U.S. and Mexico. In Laredo alone, such crossings shot up from 3.6 million in 2023 to 6.2 million in 2024.
Once considered “relatively quiet industrial markets…the Texas border markets have seen industrial space inventory grow by 18% over the past five years, reflecting continued development in the region,” the report commented.
It noted that 60% of the region’s total import/export value depended on computer-related machinery and parts, electrical machinery and equipment, and vehicles.
Significant expansions and investments in the U.S. by manufacturers that already had operations in Mexico were announced in the past year by Eaton Corp., Sumitomo Electric Wiring Systems, Bosch, and First Brands Group, among others.
Logistics and distribution companies like Source Logistics, Kuehne + Nagel, Ryder Logistics, and Maersk also made major regional commitments.
“Construction, as a percentage of inventory among the border markets, ended 2024 at 7.3%, one of the highest in the U.S.,” the report stated. The equivalent share for the U.S. as a whole was 2.5%.
El Paso and Laredo received 99% of the region’s under-construction development and 86% of deliveries over the past five years. The cities benefited from their location near the Mexican states of Chihuahua, Tamaulipas and Nuevo Leon and easy access to I-35 and I-10.
In 4Q 2024, El Paso had 4.1 million square feet under construction, adding to its existing 64.2 million square feet. Laredo had 6.9 million square feet under construction, adding to its existing 42.9 million square feet.
The cities of McAllen and Brownsville offer cost-effective warehouse options but lack the big-box inventory large logistics occupiers seek; however, they could benefit from being close to SpaceX facilities nearby, the report predicted.
“The industrial real estate markets [along the Texas border] appear primed for continued growth. However, tariffs–or even the threat of tariffs–loom large,” the report cautioned. “Some occupiers will likely pause decision-making and investment until more is certain.” That pause in itself could trigger higher vacancy and downward pressure on pricing.
The long-term picture, however, was less gloomy. “As risks adjust and decisions resume, the Texas border markets stand to benefit from the same factors that drove their recent growth: real estate and labor affordability, strong trade relationships with Mexico, and proximity to major Mexican manufacturing hubs and Texas Triangle cities,” the report predicted.
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