For the 1st Quarter of 2010 manufacturing activity is showing signs of improvements and employment is rebounding. No major operations left Cd. Juarez in the last three months. The lack of a clear rebound in real estate market is likely to continue for at least the next 6 to 12 months as currently un-productive "shadow vacancies" are absorbed.

Shadow Vacancy represents manufacturing space that is not currently being used for production purposes but is not on the market for lease and, therefore does not show up in the official vacancy number. This space needs to be put back into productive use before companies start looking for additional manufacturing space and new demand is generated in the market. Assuming the global economy continues to improve it could be another 6 to 12 months before the shadow vacancy is absorbed and any real demand for space is generated. On top of the high amount of shadow vacancies across the market, new investment continues to be limited.

One new company entered the market during the 1st quarter. Farger data World Foams leased 95,000 SF in the Centro industrial Juarez and will start a foram packaging operation this spring. Werner Ladder also leased an additional 59,000 SF in the Northgate Park. All other Absorption was the result of companies relocating from one building to another, either taking advantage of lower lease rates or downsizing operations. This is consistent with trends throughout 2009.

See below for an overview of the Juarez industrial market in the 1st Quarter of 2010.

• Total Industrial Market Size:58,956,000 SF
• Total Activity:729,000 SF
• Gross Absorption: 507,000 SF
• Net Absorption: -327,000 SF
• New Construction:100,000 SF
• Industrial Vacancy:13.6%

Overall new vacancies outpaced absorption by 327,000 SF, driving the vacancy rate up slightly to 13.6%. Team NAFTA is currently tracking 100 available industrial buildings across Cd. Juarez. As anticipated at the end of last year there is a growing pipeline of projects looking at Northern Mexico, conversations with many of our customers over the last few months lead us to believe that firms will use the slowdown to evaluate cost-saving options and will continue to look at Mexico as the most logical choice for future investment due to labor and logistics. We expect to see a large number of site selection projects over the next six to twelve months and new investment starting in 2010.

 

Source: 2010 1st Quarter Market Summary : El Paso, Texas / Cd. Juarez, Mexico . www.TeamNAFTA.com.

Updated: April 2010.