TeamNAFTA.com

El Paso, Texas
El Paso’s industrial real estate market continues to be slow. Overall market activity (building sales, new leases and lease renewals) was slightly under 1,000,000 SF. This is an improvement over the two-year quarterly average but still resulted in a net absorption of -45,000 SF. Most of the activity came from several large lease renewals: Handguards renewed on 187,000 SF, Tyco on 201,000 SF and Philips for 86,000 SF. The two new significant transactions were Austin Foam’s lease of 115,000 SF and A.O. Smith’s lease of 144,000 SF. However, both companies vacated buildings of similar size.

Cd. Juarez, Mexico
Industrial real estate activity has increased over the last three months but it is clear that market
fundamentals have not improved enough to indicate a change in the overall climate. Sale and leasing activity was higher in the 2nd quarter than what we have seen over the last two years, but most of the activity continues to be the shuffling of companies from one facility to another. Many of the transactions this quarter will result in vacancies later this year as companies complete the relocations into their new facilities.

The U.S. - Mexico Borderzone was featured in the May 1, 2009 issue of Site Selection Magazine.

The article discusses the continuing trend of shifting manufacturing operations from Asia to Mexico, the steady decline in violence along the Mexico border, and how Mexico is poised and ready for a rapid economic recovery.

To read the complete article, click here.

The rising cost of fuel has become the leading risk factor facing global manufacturers. Although most news reports focus on the consumer, fuel costs are causing manufacturers to rethink their overall logistical supply chain costs of making products abroad.

Since 2000, the cost of shipping a standard 40-foot container from Asia to the East Coast has tripled, and will likely continue to increase as oil prices continue to climb towards $200 a barrel. Once containers from China reach U.S. ports....

Because of the rising cost of shipping, Mexico is proving to be a more attractive manufacturing option for many companies.  Since 2000, the cost of shipping a 40-foot container from Asia to the United States has already tripled, with prices looking to increase again.

A recent Wall Street Journal article states the following:

Emerson, the St. Louis-based maker of electrical equipment, recently shifted some production of items such as appliance motors from Asia to Mexico and the U.S., in part to offset rising transportation costs by being closer to customers in North America.

Jeff Rubin, chief economist at CIBC World Markets in Toronto predicts that Mexico will be the “biggest winner of all” as increased transportation costs make China uncompetitive in an ever-growing list of businesses in North America.

Excerpts from June 13, 2008 issue of Wall Street Journal. Click here to view. WSJ subscription required for full online article.