CBRE: El Paso industrial market ‘challenging’ for users

EL PASO – An industrial market expert with CBRE says the local industrial market is showing the strongest fundamentals he’s seen in his 15-year career, but there are challenges ahead.

"Low vacancy in the face of strong demand is driving rental rates higher," said Christian Perez Giese, CBRE senior vice president and director. "We will need to see some new speculative construction soon as we are quickly running out of space for new tenants or those that need to grow.

“It is a challenging market for industrial users in El Paso today. Rental rates are on the rise, and there is simply a declining supply of warehouse and light industrial space across town. Tenants looking for spaces under 100,000 sf are going to have a very hard time today, and they better be prepared to pay a higher rent than they have grown accustomed to in the past ten-plus years."

Other local market observations from CBRE:

• El Paso absorbed more industrial space in Q2 2017 than the four previous quarters combined.
• Vacancy decreased 80 basis points (bps) quarter-over-quarter and 70 bps year-over-year.
• The Northeast and Central submarkets saw asking rent increases. The market average decreased by $0.05 per sf since Q1 2017 and $0.03 per sf year-over-year.
• A speculative development and a build-to-suit lease broke ground in Q2 2017, the first of their kind in the current cycle.