A New York-based private investment firm and a Massachusetts-based real estate company have staked a claim in the future of El Paso’s industrial real estate market.
Raith Capital Partners and Equity Industrial Partners have jointly acquired 22 industrial buildings for an undisclosed price in El Paso and Santa Teresa, New Mexico, global real estate company CBRE announced Thursday.
The firm’s El Paso office represented the sellers, IDI Logistics and Russell Hanson, in the deal, which includes nearly 2 million square feet of industrial space and 35 acres of land, mostly in El Paso.
“With these strategic acquisitions, the partnered buyers were able to enter the El Paso market with a substantial position, becoming the fourth largest institutional owner in the market,” William Caparis, senior vice president at CBRE in El Paso, said in a news release.
It’s probably the biggest deal of its kind to close in El Paso in the past five or six years, said Arturo De la Mora with CBRE in El Paso.
Although warehouse space has become hard to find in El Paso, there’s not a lot of new space being built. That has pushed up rents and created opportunities for investors.
“This investment into the El Paso market points to two interrelated drivers that are causing the El Paso area to be more appealing to institutional investors than ever before,” De la Mora said.
First, the trade tensions between China and the U.S. have driven more investors to look at markets closer to home, including Mexico and the border region, De la Mora said. And, second, investors are turning to smaller markets like El Paso that haven’t traditionally seen as much investment activity as major markets.
At the end of 2019, El Paso had 4% vacancy in the industrial sector, the lowest rate seen since CBRE began tracking the market. De la Mora said he expects that to drive the construction of new buildings “on spec,” meaning without a tenant lined up, this year.
“We already have new players that have no presence in El Paso looking at this market and scrambling to find good pieces of land they can develop industrial,” he said.
The buildings included in the deal are located in the Pan American Industrial Park and on Joe Rodriguez Drive in the Lower Valley, in Far East El Paso and Santa Teresa, New Mexico.