EL PASO, TX–According to the latest El Paso Industrial MarketView report from CBRE, the local market set a new 13-quarter high, seeing its highest net absorption total since the first quarter of 2011. Total transactions for the quarter were 624,202 square feet, with 341,574 square feet of positive absorption. This positive net absorption comes in the wake of two quarters of negative net absorption.
CBRE's Christian Perez Giese tells GlobeSt.com, “I am surprised by the dynamics locally for supply of smaller class A space compared to larger class A space. The market for smaller spaces is much tighter than for larger spaces.”
As with most Texas markets, class A space is seeing the highest level of demand. For class A space under 100,000 square feet, the vacancy rate fell to 2.8% this quarter.
The area is already being stimulated by the early delivery of the new Union Pacific intermodal facility. The $400 million project came online a year earlier than scheduled.
Even with the low class A vacancy rate and the increased activity around the intermodal facility, the report points out that large blocks of available space has continued to temper progressive activity. According to the report, large blocks of vacant space over 200,000 square feet compose eight of the current 149 available properties, but these few properties account for 31% of all vacant space.
Adding to this block of space is the contraction of 105,000 square feet by Johnson Controls, which entered the market during the second quarter.
Still, Giese feels the market will continue to strengthen in the year ahead. “The El Paso industrial market will be much tighter, with several large transactions absorbing part of the bulk vacancy,” Giese says.
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