Savills: Texas border markets boom but uncertainty looms

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MCALLEN, Texas – Texas border markets boom, uncertainty looms. This is the title of a new seven-page report from Savills US about the economic growth of the Texas-Mexico border region.

The report states that while there has been an “exponential growth” in trade in Texas border markets, the region faces an “inflection point” because of shifting trade policies. This could impact the region’s near-term trajectory, the report states.

Founded in the UK in 1855, Savills is one of the world’s leading real estate service providers. Its experience and expertise spans the globe, with 700 offices across the Americas, Europe, Asia Pacific, Africa and the Middle East.

The U.S. division of Savills produced the new report. The team that worked on it were Mark Russo, vice president of industrial research, Chris Bauers, research manager, industrial, Deandre Prescott, research manager, and James Cataldo, research analyst, industrial.

Rio Grande Valley-based industrial real estate advisor Bryan Cook spoke with Bauers and facilitated the exclusive reprinting of the report in the Rio Grande Guardian International News Service. Click here to read Cook’s analysis of the report.

The Texas-Mexico border markets from El Paso to Brownsville accounted for $540 billion in import/exports value in 2024, a 40% increase from five years ago. according to the Savills report. The exponential growth in trade is driving expansion of local industrial property markets with speculative construction that is unprecedented. However, the region faces challenges with shifting trade policies that could alter its growth plan.

I-35 drives Texas border trade growth Texas border inbound and outbound container crossings. The importance of I-35 provides a backdrop for the growth and maturation of the Texas border markets of El Paso, Laredo, McAllen and Brownsville as manufacturing and logistics hubs.

The top three commodities making up 60% of the total yearly import/exports in 2024 were computer-related machinery and parts, electrical machinery, equipment and parts as well as vehicles.

According to the report, manufacturers with existing operations in Mexico account for a handful of recent announcements and are some of the largest existing occupiers in the market: Eaton Corp.: El Paso, March 2024 — Acquired the former Helen of Troy facility in El Paso as part of a larger $80.0 million investment earmarked for the further expansion of operations in the market. Sumitomo Electric Wiring Systems: El Paso, January 2024 — Japanese-based manufacturer of automotive electrical systems committed to 525,000 square feet (sf) in the Pellicano Industrial Park. Bosch: El Paso, February 2024 — The German auto electronics supplier took 430,000 sf in the Rancho del Rey Logistics Park and will use the facility for light manufacturing and assembly operations. First Brands Group: Brownsville — One of the largest industrial occupiers in Brownsville, the global automotive parts manufacturer also operates facilities in Matamoros, Mexico, under 20 miles from the Brownsville facility. Logistics and distribution/3PL occupiers have made serious commitments to support clients moving goods across the border and throughout the region: Source Logistics: Laredo, September 2024 — The 421,000-sf commitment added to their existing presence in the region and 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 months apart, the global logistics company consolidated four facilities into one in El Paso and committed to 432,000 sf in Laredo. Ryder Logistics: Laredo, February 2024 — New facility is designed to support growth in manufacturing while transporting products across the border. Maersk: El Paso, September 2024 — The facility is designed to facilitate fast and flexible cross-border trade between the United States and Mexico.

Rising container crossings have increased 1.5 times since 2023 as demand from manufacturing and logistics have forced the Texas border industrial markets to change. Historically, El Paso, Laredo, McAllen and Brownsville were considered relatively quiet industrial markets, especially compared with the Texas Triangle markets of Dallas-Fort Worth, Houston and Austin. However, the Texas border markets have seen industrial space inventory grow by 18.0% over the past five years, reflecting continued development in the region. In 2024, El Paso saw 1,357 container crossings, an increase from 1,029 in 2023. Laredo saw 6,189 container crossings in 2024 compared to 3,609 in 2023. McAllen saw 1,337 container crossings in 2024 compared to 798 in 2023, and Brownsville saw 804 container crossings in 2024 compared to 466 in 2023.

What sets the markets apart is the development of pipeline sets. The Texas border markets are forecasting future growth as seen by square footage under construction as a share of current inventory. While overall U.S. construction pipeline has slowed significantly, the Texas border markets’ pipeline is increasing. As of late 2024, Laredo’s construction pipeline measured 16% of the current market inventory, which is slightly higher than Austin’s 15%.

While the Texas border markets are comparable, some differences stand out. El Paso and Laredo make up 99% of the region’s under-construction total and 86% of deliveries over the past five years. They both benefit from their proximity to Mexico, more specifically the states of Chihuahua, Tamaulipas, and Nuevo Leon as well as immediate access to I-35 and I-10. McAllen and Brownsville, on the other hand, are more cost-effective warehouse options but have less modern big-box inventory for large logistics occupiers. Their close proximity to the SpaceX facility in Boca Chica Beach positions both markets to benefit from further successes and expansions by the space exploration firm.

As trade policies evolve, this could reshape supply chains in the Texas border markets. The tariff threat could disrupt trade flows and leave manufacturers with unforeseen higher input costs. There are plausible arguments that tariffs could benefit certain occupiers and markets, as some manufacturing may shift state-bound, or “safety-stocking” inventories in the U.S. could drive additional warehouse demand. At the same time, the upcoming renegotiation of the USMCA in July 2026 is creating additional uncertainty. The risk of unknown trade policy may cause some occupiers to pause decision-making and investment until there is more certainty. A construction pipeline reliant on speculative projects is at risk when decision-making stops, leading to higher vacancies and downward pressure on pricing. Long-term, the Texas border markets stand to benefit from the same factors that drove their recent growth: real estate and labor affordability, strong trade relationships with Mexico and proximity to major Mexican manufacturing hubs and Texas Triangle cities.

Here is the Savills report: