114
Southern New Mexico's industrial market, particularly Dona Ana County, has remained stable through 2013. We project solid growth in this arena for 2014. A majority of the growth will be in the Santa Teresa area where Union Pacific is in the middle of a massive investment that will create the largest intermodal inland port in the United States. This project has already brought jobs and more than $40 million to New Mexico contractors so far. It is expected to create more than 600 permanent jobs in mechanical, electrical, architectural, utilities, track and civil engineering.
Santa Teresa’s intermodal station has started to generate significant conversations with major companies for distribution and warehouse properties. Growth in Santa Teresa is further fueled by the proximity to the Mexican border where many of these same companies operate maquiladora plants on the Mexican side. We continue to struggle to meet demands for large-box users in Santa Teresa due to the limited availability of space in the area. This problem is compounded by the tight lending market, where little equity is available to developers looking to bring new speculative space on line.
Additionally, many of the users looking in the Santa Teresa area typically do not have a six-month window for a build-to-suit opportunity.
Though we predict a growth in the industrial market for the fourth quarter of 2013 and into 2014, leasing rates have not risen to reflect the amount of demand in the market. The flat lease rates year after year can be attributed to the inability of investors and developers to purchase land and build for a rate that is competitive with existing inventory on the market.
Alaska Structures continues to be the major occupant of space for the West Mesa Industrial Park in Las Cruces. Alaska currently owns or leases nearly 300,000 square feet of space in this market. We have also seen a slow uptick in demand for smaller space users, between 5,000 square feet and 50,000 square feet, which had been a dormant market for southern New Mexico in recent years. Hercules recently entered the market and signed a five-year lease for 12,000 square feet in a space that had been vacant for several years, showing that industrial users are beginning to move into the area again, which is an excellent sign for 2014.
— Jake Redfearn, principal, and Jacob Slavec, associate broker, NAI 1st Valley in Las Cruces