Absorption Starts Strong, Vacancy Uptick
Overall industrial activity remains solid across El
Paso, well above historical averages for occupancy
and rents. Net absorption during Q1 2018 was
116,136 sq. ft., just 855 sq. ft. below Q1 2017
figures, and 16,000 sq. ft. above Q4 levels. The
market-wide vacancy rate increased by 40 basis
points (bps) compared to the previous quarter due
to large block of class B space. Year-over-year,
vacancy has declined by 80 bps.
Near-Record Activity Level, Asking Rates Slip
The El Paso industrial market saw 36 transactions
including new leases, renewal and delivery of new
construction during the last 90 days. Renewals
accounted for 62% of the 1.4 million sq. ft. of
activity while new leases comprised 35%.
The market-wide asking rent decreased by $0.01
per sq. ft. compared to Q4 2017. This was caused
by a 200,000 sq. ft. Class B space that came online
during Q1 2018 and caused Class B rates to fall by
$0.03 per sq. ft. Class A rates remain well above
historical norms at $4.43 per sq. ft. and increased
quarterly by $0.01 per sq. ft.
BTS Continues To Drive New Construction
After a record quarter of new construction,
development levels remain strong. Three new
build-to-suit (BTS) projects totaling 145,000 sq. ft.
began moving dirt in Q1 2018. Three other BTS and
one spec project (468,500 sq. ft. total) were also
under construction. During Q1 2018, a 118,000 sq.
ft. BTS and a 183,000 sq. ft. spec were delivered to
the Central and West submarket, respectfully.