Pacheco: Inside the El Paso-Santa Teresa industrial market

First in a two-part series. 

I recently interviewed Christian Perez Giese, executive vice president and director of the CBRE industrial real estate office in El Paso and Ciudad Juarez, to ascertain what is happening in terms of industrial space trends and cross-border trade trends in the El Paso-Santa Teresa-Juarez market. CBRE recently published its 2025 market report on these subjects. Below is part one of the interview. 

How did the El Paso-Santa Teresa region’s industrial real estate market do in 2025, and what’s been happening during the past 10 years?

It was the second-best year for net absorption that we’ve ever seen for El Paso and Santa Teresa. We’ve seen tremendous growth. That was accelerated by the 2017 and 2018 tariffs, and that had a large impact on our business in Juarez, Mexico. Then, coming out of the COVID and supply chain disruptions, that’s when it really started to accelerate on the north side of the border. What we have been seeing is a trend toward larger and more sophisticated real estate requirements. CBRE has been talking about a “flight to quality” across the industrial sector for years now. The flight to quality means larger industrial buildings, buildings built for a higher volume, more sophisticated logistics and distribution, and buildings that meet e-commerce standards. They have more trailer parking, and enhanced floors for higher racking, any type of robotics, and larger power requirements. 

How much total industrial space was built in the El Paso-Santa Teresa market in 2025, and how much space does the market have now? 

The total built in 2025 was approximately 5 million square feet. We just crossed the 80- million-square-foot threshold for the regional market, which is exciting. So far in 2026, 6 million square feet are under construction, 5 (million) of which are speculative buildings.

Your report states that there was an average vacancy rate of 10.4% in 2025. Is this traditionally where the market should be? 

Just above 8% is our historical average, so 2025 was slightly elevated.  We got as low as one at 1.2% in 2022, which was the lowest. One thing that’s important to remember about the industrial segment in El Paso and Santa Teresa is that between 2005 and 2018, there was not a single speculative industrial building built. If you look at what’s been built from 2018 until today, that represents about 25% of the total industrial space. That means only 25% of our industrial supply are modern buildings that would be qualified for users that are following this trend of a flight towards quality.

What about the size of spec buildings? 

They’re getting bigger. We are seeing companies making longer-term investment decisions from a manufacturing perspective in northern Mexico. This is part of a larger story of nearshoring. But if you have companies that are making a longer-term decision to put in modern manufacturing operations in northern Mexico, once those operations are up and running and putting product out the door, then they are looking to the El Paso-Santa Teresa market as their first-mile entry point into the U.S. logistics and supply chains. If you’re making long-term decisions in Mexico, it’s natural that you’re going to be making longer-term decisions on the U.S. side of the border. What that means for our clients is that they are putting a distribution component on top of the normal cross-border warehouse. During the past 25 years, we have been a “make your product in the morning in Juarez,” “a ship across the border to El Paso-Santa Teresa in the afternoon,” and then “move that product over the next couple of days once you’ve consolidated the freight in a regional distribution center.” 

Your report states that 11 of the top 15 largest industrial space deals in the region were more than 200,000 square feet. The value of a cargo shipment crossing the Mexican border has increased. Does that also reflect what you’re talking about?

Yes. A fundamental change that we were seeing is that in Juarez we’re seeing growth of the consumer electronics business, and specifically the manufacturing and assembly of servers that are going into data centers. Although the auto sector is maintaining its supply and production footprint, this sector has been flat for the last 10 years. The growth that we’re seeing is in these new sectors. 

According to your report, the top industries by industrial space absorption were transportation/third-party logistics (48%), computer manufacturing (18%), electronics/electrical equipment (11%), and auto and parts manufacturing (9%).  Are we seeing a shift going on in the market? 

We are, and these same trends are holding for 2026. 

How much industrial space was delivered in Juarez in 2025, and how much industrial space does the Juarez market now have?

About 4.4 million square feet were delivered in 2025. The total is about to surpass 100 million square feet, probably this quarter or next quarter. New construction in Juarez has slowed down dramatically, as leasing activity has slowed down over the last two years. That is really being driven by geopolitical uncertainty. Tariffs are one example of that, and the upcoming renegotiation of the USMCA (U.S.-Mexico-Canada Agreement) is another. A lot of businesses are waiting for clarity on some of these issues before they start projects.

Jerry Pacheco is the executive director of the nonprofit International Business Accelerator. He can be reached at (575) 589-2200 or jerry@nmiba.com.