By: Max Prestridge
Vice President of Sales and Leasing, NAI El Paso
El Paso is noted for its stable economy and commercial real estate industry, much of which is tied to Ciudad Juarez and the Mexican state of Chihuahua across the border. Manufacturing in Mexico is supported by suppliers, warehousing and logistics in the U.S., and it’s estimated that up to half of the 1.5 million residents of Juarez regularly shop in El Paso.
The Federal Reserve Bank of Dallas reports that El Paso metro area economic activity continues to expand. In June 2014, the Business Cycle Index registered strong gains at 6 percent annualized growth. This is in comparison to a first-quarter downturn. Nonfarm employment grew at a 6.4 percent annualized rate. The city’s June 2014 unemployment rate was 7.1 percent, while the Texas rate was 5.1 percent and the national rate was 6.1 percent.
The dollar value of annualized imports and exports to Mexico through El Paso was down 7 percent compared to the year before. Home sales rose approximately 30 percent from June of 2013 to June of 2014. Inventory levels were at 7.8 months, compared to 7.6 months a year earlier.
As the economy has expanded, so has the need for civic and commercial space.
The $4.9 billion expansion of Fort Bliss was completed in early 2012. Construction is underway on a new $1 billion Army Medical Hospital to be completed in 2017.
The $75 million Southwest University Park opened in downtown El Paso this spring. The venue, home of the Class AAA El Paso Chihuahuas baseball team, was named ballpark of the year by BaseballParks.com. As of July 13, a new single-season attendance record has been set for minor league baseball with 334,978 guests passing through the turnstiles.
A multimillion-dollar transformation is taking place at the University of Texas at El Paso. The campus transformation is designed to create an aesthetically pleasing, pedestrian-friendly environment with green spaces.
Construction is set to begin on the Cardwell Collaborative. This is a fourstory biomedical innovation center described as a biomedical research park inside a building. The facility is part of the 440-acre Medical Center of the Americas campus. The campus is home to the Texas Tech University Health Sciences Center, University Medical Center and the El Paso Children’s Hospital. Construction is underway on a new teaching hospital and medical office building in northwest El Paso. This is a multimillion-dollar joint effort between Sierra Providence Health Network and Texas Tech University. Improvements include a 110,000-square-foot office building and a 140-bed hospital. The project should be completed in 2016.
On the retail front, the 600,000-squarefoot Fountains at Farah opened in late September 2013 at an estimated cost of $70 million, with tenants including T.J. Maxx, Nordstrom Rack and Best Buy.
Construction and renovation have been completed on two historic downtown buildings, the Mills building and the Plaza building, totaling 270,000 square feet. In addition, the renovation of San Jacinto Plaza is underway, as is construction on the Mills Plaza Promenade.
In west El Paso two mixed-use, master-planned projects will utilize smart code zoning, which emphasizes highdensity walkability with open spaces.
Montecillo is a 300-acre development stressing elements of New Urbanism. The Venue at Montecillo is a new four-story apartment complex with retail space on the first floor. These units are 100 percent occupied with a waiting list and command the highest rents in town, starting at $700 per month. Santi Dwellings, another luxury apartment complex, is now open as well. Time is a 12,000-squarefoot, nontraditional entertainment retail complex that opened at Montecillo in late July. It is anchored by two restaurants and a coffee shop. There are also seven small shops selling unique clothing, jewelry and outdoor décor. Alamo Draft House has broken ground on an eight-screen, high-end theater at Montecillo scheduled to open in 2016. Additionally, a senior retirement complex is under construction and there are future plans for townhomes and single-family homes.
Aldea is a 200-acre master planned community adjacent to Montecillo. It will be anchored by a new Walmart Supercenter, which should be built in approximately two years. A new I-10 access road and interchange are being constructed to accommodate these projects.
Vacancy & Rents
According to CoStar, the secondquarter office vacancy rate is estimated at 7.3 percent, down from the previous quarter. Average quoted rental rates for all classes of office space were $15.73 per square foot annually.
The El Paso retail market has a second-quarter estimated vacancy rate of 4.9 percent, which is unchanged from the previous quarter. Average quoted lease rates were $12.28 per square foot per year.