El Paso occupies a singular position in North American industrial real estate. Situated directly across the Rio Grande from Ciudad Juarez, Mexico, this border metropolis anchors a bi-national industrial market spanning approximately 180 million square feet. Mexico surpassed China in 2023 to become America's largest trading partner, with bilateral trade exceeding $505 billion in 2024. The nearshoring wave that drove Juarez's industrial inventory from 71 million to 100 million square feet in just four and a half years is now spilling across the border, fueling demand for warehouse, distribution, and logistics space throughout the El Paso metro.
This guide covers everything you need to know about financing industrial properties in El Paso, from loan programs and rates to submarket analysis, tenant considerations, and the impact of cross-border trade on property values.
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Why Is El Paso One of the Hottest Industrial Markets in the Country?
El Paso's industrial sector has been transformed by the convergence of nearshoring, trade infrastructure investment, and the reshaping of global supply chains. What was once a secondary logistics market has become a primary gateway for cross-border commerce.
The numbers tell a compelling story. The combined El Paso-Juarez industrial market spans approximately 180 million square feet, making it one of the largest bi-national industrial corridors in the Western Hemisphere. Over the past two years, the combined El Paso and Laredo markets accounted for more than 5% of total U.S. industrial leasing, compared to a historic average of roughly 1%. That fivefold increase in leasing activity reflects the fundamental restructuring of North American supply chains.
Nearshoring is the primary demand driver. As American companies relocate manufacturing operations from Asia to Mexico, they need distribution, warehousing, and logistics capacity on the U.S. side of the border to receive and process goods. A second wave of nearshoring activity is expected by late 2025 or early 2026, which should sustain industrial demand in El Paso for years to come.
El Paso's industrial vacancy rate stood at 15.7% as of Q3 2025, up from 14.9% in the prior quarter as new speculative development delivered. While this figure is higher than some other Texas industrial markets, context matters. The vacancy increase reflects new supply being absorbed rather than demand weakness. Developers have delivered millions of square feet of modern logistics space to meet the surge in cross-border trade activity, and absorption is expected to tighten vacancy over the next 12 to 18 months.
For a complete overview of El Paso's commercial real estate market, visit our El Paso commercial loans hub.
What Types of Industrial Loans Are Available in El Paso?
El Paso industrial property investors have access to a full range of financing programs, each suited to different deal profiles and investment strategies.
Conventional bank loans are the most common financing option for stabilized industrial properties with creditworthy tenants and long-term leases. Texas-based and national banks offer rates from 5.5% to 6.5% with LTVs of 65% to 75%. Terms typically run 5 to 10 years with 25-year amortization. These loans work best when the property is fully leased to tenants with strong credit profiles and remaining lease terms that exceed the loan term.
CMBS loans provide non-recourse financing for larger industrial deals. Rates range from 6.0% to 6.8% with LTVs up to 75%. CMBS is particularly well suited for El Paso industrial portfolios or single assets valued above $5 million. The non-recourse structure means the loan is secured by the property rather than the borrower's personal assets, which appeals to investors seeking to limit personal liability.
SBA 504 loans are an excellent option for business owners purchasing or building industrial space they will occupy. The SBA 504 program allows up to 90% financing with a below-market fixed rate on the CDC portion, typically 6.0% to 6.5%. For a manufacturer or logistics company acquiring a 50,000 square foot facility near the Ysleta-Zaragoza Port of Entry, the SBA 504 program dramatically reduces the required down payment from 25% to as little as 10%.
Bridge loans serve investors acquiring value-add industrial properties that need renovation, tenant replacement, or lease-up before qualifying for permanent financing. Rates of 8.5% to 12.0% reflect the short-term, higher-risk nature of these loans, but the ability to move quickly on distressed or transitional assets justifies the cost. Learn more about bridge loan programs.
Life company loans offer the lowest rates (5.5% to 6.2%) and longest terms (7 to 15 years) but require the highest quality assets: credit tenants, long leases, and modern specifications. For a 200,000 square foot Class A logistics facility leased to a national 3PL firm, life company financing provides the most favorable long-term economics.
Hard money loans fill the gap for fast-close situations, distressed acquisitions, or borrowers with credit challenges. Rates of 10% to 14% are steep, but closing in days rather than weeks can be the difference between winning and losing a competitive deal. Explore our hard money lending options.
Where Are the Key Industrial Corridors in El Paso?
El Paso's industrial geography is shaped by proximity to ports of entry, highway infrastructure, and rail connections. Understanding these corridors helps investors identify the highest-demand locations and strongest financing opportunities.
The East Side and Ysleta corridor is El Paso's industrial heartland. This submarket has the highest concentration of warehouse, distribution, and manufacturing space, driven by proximity to the Ysleta-Zaragoza Port of Entry. The Ysleta-Zaragoza crossing handles the majority of commercial vehicle traffic between El Paso and Juarez, making properties within a few miles of the crossing extremely valuable to logistics tenants. Amazon's large fulfillment center on the far East Side anchors a growing logistics corridor. Developers have planned approximately 2.4 million square feet of additional industrial space in this area, including 200,000 to 300,000 square feet of cold and frozen storage.
The Socorro and Southeast corridor is emerging as El Paso's next major industrial growth zone. Trammell Crow and Barings' Speedway Logistics project, an 804,283 square foot facility across two buildings, represents the scale of development activity in this area. Sky Park El Paso, a premier industrial logistics park, recently broke ground on Phase 1. The area benefits from available land, newer infrastructure, and proximity to both the Ysleta and Fabens crossings.
Santa Teresa, New Mexico, while technically across the state line, functions as part of the El Paso industrial market. Colliers and Killam Development recently closed on a 272-acre land sale for industrial park development, with engineering beginning in Q1 2026. The Santa Teresa Port of Entry is one of the fastest-growing commercial crossings in the region, and its surrounding industrial development zone attracts tenants seeking newer facilities with lower property tax burdens.
The Northeast corridor near Fort Bliss offers industrial opportunities driven by defense contracting and military logistics. Properties in this submarket benefit from the stability of defense spending and the need for specialized storage, maintenance, and distribution facilities.
How Do Lenders Evaluate El Paso Industrial Properties?
Industrial property underwriting focuses heavily on tenant quality, lease structure, and property functionality. Understanding what lenders look for helps you prepare a stronger application and negotiate better terms.
Tenant creditworthiness is the most important factor in industrial loan underwriting. Lenders evaluate each tenant's financial strength, industry stability, and likelihood of lease renewal. A property leased to a national logistics company or investment-grade manufacturer will qualify for significantly better terms than one leased to a small, privately held business. In El Paso, cross-border logistics companies, defense contractors, and e-commerce fulfillment operations are viewed as strong tenant profiles.
Lease structure and remaining term directly affect the loan's risk profile. Lenders prefer long-term leases (7 years or more) with annual rent escalations, NNN (triple net) structures that pass operating expenses to tenants, and renewal options that extend beyond the loan maturity date. A property with 10 years of remaining lease term to a credit tenant might qualify for a 65% to 75% LTV conventional loan, while the same property with only 2 years remaining might require bridge financing.
Property functionality matters for industrial assets. Lenders assess clear height, dock-high loading doors, column spacing, power capacity, truck court depth, and fire suppression systems. Modern logistics facilities with 32-foot clear heights, cross-dock configurations, and ample trailer parking command premium valuations and qualify for the most favorable financing.
Environmental considerations are particularly relevant for El Paso industrial properties. Phase I Environmental Site Assessments are required for virtually all industrial loans. Properties with prior manufacturing use, fuel storage, or chemical handling may require Phase II testing. Lenders may also evaluate proximity to the border and any environmental implications of cross-border operations.
Debt Service Coverage Ratio requirements for El Paso industrial loans typically start at 1.25x, meaning the property's NOI must exceed annual debt service by at least 25%. Properties with credit tenants and long leases may qualify at 1.20x, while properties with shorter leases or weaker tenants may need to demonstrate 1.30x or higher coverage.
Use our commercial mortgage calculator to estimate monthly payments and evaluate DSCR for your El Paso industrial property.
What Are Cap Rates for El Paso Industrial Properties?
Cap rates for El Paso industrial properties vary significantly based on building quality, tenant profile, and location within the metro. Understanding the cap rate landscape helps you evaluate deals and structure your financing appropriately.
Class A logistics facilities built after 2018 trade at cap rates of 5.5% to 6.0% in El Paso's prime corridors. These modern warehouses with high clear heights, efficient layouts, and credit tenants attract institutional capital and life company financing. Properties near the Ysleta-Zaragoza and Santa Teresa ports of entry command the tightest cap rates due to their strategic value in cross-border supply chains.
Modern warehouses from 2005 to 2017 trade at 6.0% to 6.5% cap rates, offering a balance of quality and yield that appeals to regional operators and value investors. These properties may benefit from modest capital improvements to bring them up to current tenant specifications.
Older industrial properties built before 2005 offer the highest yields at 6.5% to 7.5%, reflecting higher maintenance costs, lower ceiling heights, and less efficient configurations. Value-add investors who can renovate these facilities to modern standards can capture significant value through cap rate compression.
Cross-dock and cold storage facilities are a specialized category with cap rates of 6.0% to 7.0% and premium valuations of $90 to $130 per square foot. The growing demand for temperature-controlled logistics space in El Paso, driven by cross-border food and pharmaceutical supply chains, supports strong fundamentals in this niche.
How Is Nearshoring Affecting Industrial Property Values in El Paso?
The nearshoring trend is the most significant structural shift affecting El Paso industrial real estate in a generation. Understanding its impact helps investors position themselves for long-term value creation.
Mexico surpassed China as America's largest import partner in 2023 for the first time in two decades. This shift reflects a fundamental restructuring of global supply chains, with American companies relocating manufacturing from Asia to Mexico for reasons including shorter transit times, lower shipping costs, geopolitical risk reduction, and tariff avoidance. The bilateral trade value between the U.S. and Mexico reached $505 billion in 2024.
The impact on the Juarez side has been dramatic. Juarez's industrial market grew from 71 million to 100 million square feet over just four and a half years, a 40% expansion. Manufacturing plants in Juarez today require more sophisticated and expensive build-outs compared to the basic manufacturing spaces the market had previously, reflecting the higher-value nature of nearshored operations.
On the El Paso side, this translates into surging demand for distribution, warehousing, and logistics space to handle goods moving north across the border. Requirements for industrial space have doubled in size from where they were 10 to 15 years ago, reflecting the scale of modern logistics operations. Developers have responded by planning millions of square feet of new speculative and build-to-suit facilities.
A second wave of nearshoring is expected by late 2025 or early 2026, driven by companies that began planning relocations during the tariff uncertainties of 2024 and are now executing on those plans. This second wave should sustain industrial demand and continue to push El Paso property values higher.
For investors, nearshoring creates both opportunity and urgency. Properties positioned near the ports of entry stand to benefit most from this structural shift, and financing these acquisitions now locks in current valuations before the next wave of demand drives prices higher.
What Are the Risks of Industrial Investing in El Paso?
While El Paso's industrial market offers compelling fundamentals, prudent investors must understand and plan for the specific risks of this market.
Trade policy sensitivity is the most significant risk factor. El Paso's industrial market is fundamentally tied to U.S.-Mexico trade flows. Changes in tariff policy, border security operations, or customs processing procedures can directly impact the volume of goods moving through El Paso ports of entry and, by extension, demand for industrial space. While the long-term trend toward nearshoring appears durable, short-term policy shifts can create volatility.
New supply competition is a near-term concern. With vacancy at 15.7% as of Q3 2025 and millions of square feet in the development pipeline, there is risk that new supply could outpace absorption in the short term. However, developers report that a significant portion of new construction is build-to-suit or pre-leased, reducing the speculative risk.
Infrastructure constraints could limit growth. Current challenges include lacking infrastructure to fully support the continued expansion of industrial occupiers, particularly in terms of road capacity, utility service, and border crossing throughput. These constraints could delay new development or limit the functional capability of some properties.
Tenant concentration risk is relevant for properties heavily dependent on cross-border logistics tenants. If trade flows shift to alternative border crossings (such as Laredo or the Arizona ports), El Paso could lose some competitive advantage. Diversifying across tenant industries and lease expiration dates helps mitigate this risk.
Environmental liability is always a consideration for industrial properties, particularly older manufacturing facilities that may have soil or groundwater contamination. Thorough environmental due diligence before acquisition protects both your investment and your loan eligibility.
What Special Considerations Apply to Cross-Border Industrial Properties?
El Paso's border location creates unique considerations for industrial investors and lenders that do not exist in most other markets.
Foreign Trade Zone (FTZ) #68 serves the El Paso region and allows businesses to import goods duty-free for manufacturing, assembly, or distribution before re-exporting or entering U.S. commerce. Properties within or adjacent to the FTZ command premium rents and attract higher-credit tenants. When financing FTZ-adjacent properties, highlight this designation in your loan application as lenders view it as a demand stabilizer and competitive advantage.
Customs brokerage and cross-border logistics tenants often require specialized facility features including bonded warehouse space, customs inspection areas, secure truck courts, and advanced security systems. Properties with these features command premium rents of $6.50 to $8.50 per square foot NNN, well above the market average.
Bi-national corporate structures are common among El Paso industrial tenants. Many companies operate manufacturing in Juarez with distribution and corporate functions in El Paso. Lenders evaluating these tenants may need to review financial statements from both U.S. and Mexican entities, which can add complexity to the underwriting process.
Proximity to specific ports of entry significantly impacts property values. The Ysleta-Zaragoza crossing handles the highest volume of commercial vehicle traffic and is the preferred crossing for most logistics operations. The Santa Teresa crossing in New Mexico is growing rapidly and offers newer infrastructure. The downtown bridges (Paso del Norte and Stanton Street) handle primarily passenger traffic and have less impact on industrial property values.
How Should You Structure Financing for an El Paso Industrial Acquisition?
The optimal financing structure depends on your investment strategy, the property's current condition, and your exit timeline.
For stabilized acquisitions with credit tenants and long leases, conventional bank loans or life company financing provide the lowest cost of capital. Target a 65% to 70% LTV with a 5 to 10 year term that aligns with the primary lease expiration. This structure maximizes your cash-on-cash return while maintaining a comfortable debt service coverage cushion.
For value-add acquisitions requiring tenant replacement, renovation, or lease-up, a two-phase financing strategy works best. Start with a bridge loan to fund the acquisition and repositioning, then refinance into permanent debt once the property is stabilized. This approach requires more upfront planning but allows you to capture the full value creation rather than sharing it with a lender through higher permanent debt pricing.
For owner-occupant purchases, the SBA 504 program offers the most favorable terms. The combination of a conventional first mortgage and an SBA-guaranteed second mortgage allows up to 90% financing at below-market blended rates. For a manufacturing or logistics company purchasing its own facility, the SBA 504 program can save hundreds of thousands of dollars over the life of the loan. Visit our SBA loans page for details.
For portfolio acquisitions involving multiple El Paso industrial properties, CMBS financing may offer the best combination of leverage, non-recourse structure, and competitive pricing. CMBS lenders are active in the El Paso industrial market and familiar with the cross-border dynamics that drive demand.
Contact our team to discuss which financing structure best fits your El Paso industrial investment.
Frequently Asked Questions About Industrial Loans in El Paso
What is the minimum down payment for an industrial loan in El Paso?
Down payments for El Paso industrial properties typically range from 10% to 35%. SBA 504 loans for owner-occupied facilities offer the lowest entry at 10% down. Conventional bank loans require 25% to 35% equity. CMBS loans generally require 25% to 30% down. Bridge loans may require 25% to 35% equity based on as-is value. Life company loans often require 35% to 45% equity but offer the lowest rates. El Paso's lower per-square-foot prices mean the absolute dollar amount is significantly less than comparable properties in Dallas or Houston.
How does cross-border trade affect industrial loan underwriting?
Cross-border trade is generally viewed positively by lenders financing El Paso industrial properties. The structural shift toward nearshoring provides a strong demand narrative that supports both current occupancy and future absorption. However, lenders also evaluate trade policy risk and may require higher debt service coverage ratios for properties heavily dependent on cross-border tenants. Properties near the ports of entry with established logistics tenants receive the most favorable underwriting treatment.
What environmental requirements apply to El Paso industrial loans?
Virtually all El Paso industrial loans require a Phase I Environmental Site Assessment, which evaluates the property's environmental history and identifies potential contamination risks. Properties with prior manufacturing, chemical handling, or fuel storage may require a Phase II assessment involving soil and groundwater testing. Lenders may require environmental insurance for properties with known or suspected contamination. Clean Phase I reports significantly streamline the loan process.
Are industrial loan rates lower for leased vs. vacant properties?
Yes, significantly. A fully leased El Paso industrial property with credit tenants can qualify for conventional rates of 5.5% to 6.5%, while a vacant or partially leased property typically requires bridge financing at 8.5% to 12.0%. The rate difference reflects the risk differential between a cash-flowing asset and one that requires lease-up. This is why many investors use a two-phase strategy: bridge financing for acquisition and stabilization, followed by refinancing into permanent debt.
What lease terms do lenders prefer for El Paso industrial properties?
Lenders strongly prefer long-term NNN (triple net) leases with annual rent escalations. The ideal lease profile includes a remaining term of 7 years or more, annual rent increases of 2% to 3%, tenant responsibility for all operating expenses (taxes, insurance, maintenance), and renewal options that extend beyond the loan maturity date. Shorter leases or gross lease structures result in higher interest rates, lower LTVs, or both.
Can I finance a build-to-suit industrial property in El Paso?
Yes, build-to-suit industrial projects in El Paso are actively financed through construction loans that convert to permanent financing upon completion. Having a signed lease from the future tenant before construction begins significantly improves your loan terms. Lenders evaluate the tenant's credit strength, lease term, and the property's projected stabilized value when underwriting build-to-suit construction loans. El Paso's strong industrial demand makes build-to-suit projects attractive to both lenders and tenants.