Market Reports

The current pace of development and absorption of manufacturing and warehousing space in El Paso reveals just how closely the local economy is linked to that of its sister city across the border, Ciudad Juárez. Mexico’s maquiladora system allows foreign companies to produce and export materials to that company’s home country, largely on a duty- and tariff-free basis. When the North American Free Trade Agreement (NAFTA) was passed in the mid-1990s, maquiladora activity saw its largest historical increase while still facing considerable competition from China for foreign investment. But when American manufacturers realized that outsourcing production to China didn’t translate to more efficient supply chains, they once again looked toward Mexico, which also boasted strong supplies of affordable labor. With the United States now locked in a trade dispute with China, the economic development initiatives offered by the current Mexican Presidential Administration and the threat of a drastically renegotiated NAFTA agreement having passed, American companies are beginning to return to Mexico. Ciudad Juárez is among the Mexican cities benefitting most from this activity, and it is translating to greater demand for storage and distribution space in El Paso. Many maquiladora companies count end users in southwestern U.S. markets as significant …

Even before the city’s population growth began exploding and its reputation as a tech hub became entrenched, Austin was always a true last-mile market for industrial users.  Now that e-commerce has morphed into a worldwide phenomenon with real staying power, Austin looks like one of the next ideal locations for institutional industrial developers to make their marks with larger projects.  However, the market does present a handful of challenges, including an intricate entitlement process, expensive land and a slightly higher cost of construction as compared to Texas’ other major markets. These barriers to entry have helped characterize the Austin industrial market we see today, with local developers leading the way. The Austin Market Today From both a developer’s and a broker’s perspective, the biggest advantage of being in a high-barrier-to-entry market, aside from less competition, is that the likelihood of becoming overbuilt is minimized.  We saw this in 2008 and 2009, when the recession forced industrial users to cut operating costs and landlords to lower rents. Like the rest of the country, Austin took some hits during the Great Recession and saw a handful of properties foreclosed upon. But due to minimal new development, the market was able to maintain …

The combined forces of population growth, increased online shopping and demand for last-mile fulfillment centers are driving development of and investment in industrial assets in major markets. Natural population growth translates to more aggregate demand and consumption of goods and services. The rise of e-commerce has guaranteed that a growing percentage of those products will be ordered online and delivered to end users within a few days, hence the need for more fulfillment and distribution facilities near major population centers. The metropolitan statistical areas (MSAs) of Dallas-Fort Worth (DFW) and Houston  are home to a combined 13 million or so people and counting. Both MSAs have seen major upticks in industrial development over the last several years while also posting record absorption numbers. And despite some vast differences between the industries and users driving demand in DFW and Houston, both markets reflect how sweeping changes in consumer behavior have elevated the fundamentals of their industrial real estate inventories. Regardless how different their economies are,  demand for space in both markets should remain robust in 2019. By The Numbers According to CoStar Group, DFW posted positive net absorption of approximately 20 million square feet in 2018, a year in which inventory …