McAllen, Texas – The Texas border market boom, uncertainty looms. This is the title of a new seven-page report from Savills on economic growth in the Texas-Mexico border region.
The report states that trade has been “exponentially growing” in the Texas border market, but the region faces an “inflection point” due to changes in trade policy. This could affect the region’s short-term trajectory, the report said.
Founded in the UK in 1855, Savills is one of the world’s leading real estate service providers. Its experience and expertise spreads around the world, with 700 offices in the US, Europe, Asia Pacific, Africa and the Middle East.
The US Savills division has produced a new report. The teams that worked on it were Mark Russo, Vice President of Industrial Research, Chris Bauers, Research Manager, Industry, DeAndre Prescott, Research Manager and Industrial Research Analyst James Cataldo.
Brian Cook, a Rio Grande Valley-based industrial real estate advisor, spoke with Bauers to facilitate an exclusive reprint of the report on the Rio Grande Guardian International News Service. Click here to read Cook’s analysis of the report.
The Texas-Mexico border market from El Paso to Brownsville accounted for $540 billion in 2024, up 40% from five years ago. According to Savills’ report. Exponential growth in trade has driven the expansion of the local industrial property market through unprecedented speculative construction. However, the region faces challenges by changing trade policies that could change its growth plans.
I-35 drives Texas Border Border Trade Growth Texas Border Inbound and Outbound Container Crossings. The importance of I-35 provides a background to the growth and maturation of the Texas border markets in El Paso, Laredo, McAllen and Brownsville as a manufacturing and logistics hub.
The top three products, accounting for 60% of annual imports/exports in 2024, were computer-related machinery and parts, electrical machinery, equipment, parts and vehicles.
The manufacturers responsible for existing operations in Mexico account for a small number of recent announcements and are some of the largest existing occupants in the market, according to the report. Eaton Corporation: In March 2024, El Paso’s former Helen acquired El Paso’s former Helen as part of a massive $80 million investment for further expansion in the market. Sumitomo Electric Wiring Systems: El Paso, January 2024 – A Japanese-based manufacturer of automotive electrical systems committed to 525,000 square feet (SF) at the Pericano Industrial Park. Bosch: El Paso, February 2024 – German automotive electronics supplier will win 430,000 SF at Rancho del Rey Logistics Park and use the facility for light manufacturing and assembly operations. First Brands Group: Brownsville – One of Brownsville’s largest industrial occupants, the global auto parts manufacturer operates its facilities in Matamoros, Mexico, less than 20 miles from the Brownsville facility. Logistics and Distribution/3PL Occupants are making serious commitments to assist clients moving goods across the region across the border. Source Logistics: Laredo, September 2024 – 421,000-SF’s commitment added to the existing presence of the region will help customers meet the demand for consumer goods from Latin America. Kuehne + Nagel: Laredo/El Paso, May/August 2024 – In two separate transactions, just a few months apart, the global logistics company has consolidated four facilities to one of El Paso and committed to 432,000 SF in Laredo. Rider Logistics: Laredo, February 2024 – The new facility is designed to support manufacturing growth while transporting products across borders. Maersk: El Paso, September 2024 – The facility is designed to promote rapid and flexible cross-border trade between the US and Mexico.
The rise in container crossings has increased by 1.5 times since 2023 as demand from manufacturing and logistics forced the Texas border industrial market. Historically, El Paso, Laredo, McAllen and Brownsville were considered relatively quiet industrial markets, especially compared to the Texas Triangle markets in Dallas, Fort Worth, Houston and Austin. However, in the Texas border market, industrial space stocks have increased by 18.0% over the past five years, reflecting the continued development of the region. In 2024, El Paso saw 1,357 container intersections. This has increased from 1,029 in 2023. Laredo saw 6,189 container intersections in 2024 compared to 3,609 in 2023.
What sets the market apart is the development of pipeline sets. The Texas border market is projecting future growth, as seen in footage of the plaza under construction as a share of current inventory. Overall, the US construction pipeline has slowed significantly, but the Texas border market pipeline is on the rise. As of late 2024, Laredo’s construction pipeline measured 16% of current market inventory. This is slightly higher than Austin’s 15%.
Texas border markets are comparable, but some differences stand out. El Paso and Laredo have accounted for 99% of the total construction shortages in the region and 86% of childbirth over the past five years. Both benefit from proximity to Mexico, more specifically the Chihuahua, Tamaulipas and Nuevo Leon provinces, as well as immediate access to I-35 and I-10. Meanwhile, McAllen and Brownsville are more cost-effective warehouse options, but with fewer modern big box inventory for large logistics occupants. Proximity to Boca Chica Beach’s SpaceX facility is located in both markets and benefit from further success and expansion by space exploration companies.
As trade policies evolve, this could restructure the supply chains of the Texas border market. The threat of tariffs can disrupt trade flows and leave manufacturers with unexpected, higher input costs. There is a plausible argument that tariffs could benefit certain occupants and markets, as some manufacturing industries are state-bound, or U.S. “safe storage” inventory could drive additional warehouse demand. At the same time, future renegotiations for the USMCA in July 2026 create additional uncertainty. The risks of unknown trade policy can cause some occupants to suspend decision-making and investment until there is more certainty. When decisions are stopped, construction pipelines that rely on speculative projects are at risk, leading to downward pressure on higher vacancies and pricing. In the long run, Texas border markets endure benefits from the same factors that have driven recent growth. It is affordable for real estate and labor, strong trade ties with Mexico, its proximity to Mexico’s major manufacturing hub and Texas’ Triangle city.
Here is Savills report:
