El Paso stands at a turning point for mixed-use development. With a population of approximately 679,000, a strategic position on the U.S.-Mexico border directly across from Ciudad Juarez, and billions of dollars flowing through cross-border trade annually, the Sun City offers a compelling landscape for investors seeking mixed-use financing. From the ongoing downtown revitalization anchored by the $85 million WestStar Tower to the expansion of the medical center district near UTEP, mixed-use properties in El Paso are attracting serious attention from lenders and developers alike.
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Why Is El Paso Emerging as a Mixed-Use Investment Destination?
El Paso's appeal for mixed-use development starts with its unique economic engine. The city sits at the crossroads of the I-10 corridor, connecting major markets from Los Angeles to Houston, and serves as one of the busiest international trade gateways in the Western Hemisphere. Roughly $100 billion in goods crosses the El Paso-Juarez border region each year, supporting a robust base of logistics, manufacturing, and professional services that generate demand for combined commercial and residential space.
Fort Bliss, one of the largest U.S. Army installations in the country, directly supports more than 40,000 military personnel and civilian employees. That population creates sustained demand for housing, retail, dining, and services, particularly in the areas surrounding the base along the northeast corridor. Mixed-use developments that combine ground-floor retail or restaurant space with upper-floor residential units are especially well-suited to serve this market.
The University of Texas at El Paso (UTEP), which awards approximately 44% of all degrees in the region, anchors the west side of the city and drives demand for student housing, dining, and retail along the Sun Metro transit corridors. The university's growing research programs in cybersecurity, aerospace engineering, and robotics are also drawing private-sector investment to nearby properties.
El Paso also benefits from Texas's lack of a state income tax, which continues to attract both businesses and residents from higher-tax states. Combined with a cost of living that runs approximately 15% below the national average, the city offers a value proposition that supports occupancy and rent growth for mixed-use properties.
What Types of Mixed-Use Properties Are Performing Best in El Paso?
The El Paso mixed-use market spans several distinct property types, each with different financing characteristics and risk profiles. Understanding which formats are attracting lender interest is critical for securing competitive loan terms.
Vertical mixed-use buildings, which stack residential units above ground-floor commercial space, are the most common format in El Paso's downtown and near-campus districts. The Union Plaza Redevelopment project, which encompasses 17 city-owned properties in the historic downtown area, is expected to generate significant vertical mixed-use development as the city seeks adaptive reuse of these parcels. Lenders view stabilized vertical mixed-use favorably because the residential component provides steady cash flow while commercial tenants contribute higher per-square-foot revenue.
Horizontal mixed-use developments, which spread residential and commercial uses across separate but connected buildings on a single site, are gaining traction along the I-10 corridor and in the northeast growth areas near Fort Bliss. These projects offer flexibility in phasing and can adapt to market conditions more easily than vertical formats.
Live-work spaces represent a growing niche in El Paso, particularly in Kern Place and the arts district along Montana Avenue. These properties combine residential and commercial space within individual units, catering to entrepreneurs and remote workers.
Transit-oriented developments along the Sun Metro Brio rapid transit corridors present opportunities for mixed-use projects that benefit from walkability and public transit access.
What Are Current Mixed-Use Loan Rates and Terms in El Paso?
As of February 2026, commercial mortgage rates in Texas start as low as 5.18%, with El Paso borrowers typically seeing rates in the 5.5% to 8.0% range for mixed-use properties depending on the loan program, property stabilization, and borrower profile. The Federal Reserve held the federal funds rate at 3.50% to 3.75% at its January 2026 meeting following three consecutive rate cuts in late 2025.
Mixed-use properties present unique underwriting challenges because lenders must evaluate both residential and commercial income streams. The commercial component is typically underwritten more conservatively, with higher vacancy assumptions and shorter lease terms factored into the analysis. Properties where the commercial space represents less than 30% of total square footage may qualify for residential lending programs with more favorable terms.
For El Paso mixed-use properties, the primary loan programs include permanent loans for stabilized assets at 5.5% to 6.5%, CMBS loans for larger properties at 5.75% to 7.0%, SBA loans for owner-occupied buildings at below-market rates with up to 90% LTV, and bridge loans for properties in lease-up or renovation at 7.5% to 11.0%.
Lenders evaluating El Paso mixed-use deals focus heavily on the debt service coverage ratio (DSCR), typically requiring 1.25x or higher. Use our DSCR calculator to model your property's cash flow against potential loan payments before approaching lenders.
How Does El Paso's Downtown Revitalization Impact Mixed-Use Financing?
El Paso's downtown is undergoing a transformation that directly benefits mixed-use property investors and developers. Several major projects completed or underway are reshaping the urban core and creating financing opportunities.
The 20-story WestStar Tower, an approximately $85 million Class A office building, has redefined the downtown skyline and attracted corporate tenants that generate foot traffic for nearby retail and dining. La Nube, a cultural and community center funded through a $72 million public-private partnership, opened in August 2024 and anchors the western edge of downtown. The $15 million Mexican American Cultural Center (MACC) adds another cultural destination that supports surrounding mixed-use properties.
Perhaps most significant for mixed-use investors is the Union Plaza Redevelopment project. The city is offering 17 city-owned properties in the historic Union Plaza area for redevelopment through adaptive reuse. This initiative, combined with developer Paul Foster's planned tower north of San Jacinto Plaza and the proposed deck plaza over I-10, signals a coordinated effort to create a walkable, mixed-use urban core.
The El Paso City Council also authorized a $4.8 million purchase of two properties for the Convention Center expansion, which will increase visitor traffic and demand for nearby retail and dining.
For lenders, this concentration of public and private investment reduces the perceived risk of downtown mixed-use projects. Properties within Tax Increment Reinvestment Zones (TIRZ) may qualify for tax incentives that improve project economics.
What Financing Strategies Work Best for El Paso Mixed-Use Projects?
Securing optimal financing for mixed-use properties in El Paso requires matching the right loan program to the specific project stage and property profile. Here are the strategies that work most effectively in this market.
Stabilized properties with occupancy above 85% and at least 12 months of operating history qualify for the most competitive permanent financing. CMBS and life company loans offer non-recourse terms at the lowest rates. In El Paso, stabilized mixed-use in the downtown, UTEP corridor, and Cielo Vista areas attract the strongest lender interest.
Value-add acquisitions where an investor plans to renovate, re-tenant, or reposition a mixed-use property are best served by bridge loan programs that underwrite to the property's future stabilized value rather than its current income. El Paso's lower acquisition costs compared to other Texas metros mean that value-add strategies can achieve strong returns even with conservative leverage.
Ground-up development typically requires construction financing followed by permanent takeout. El Paso's entitlement process is generally straightforward compared to coastal markets, and the city's economic development office works with developers on incentive packages. Construction lenders evaluate pre-leasing strength, developer track record, and location relative to demand drivers like Fort Bliss and UTEP.
Owner-occupied mixed-use buildings where the owner operates a business in the commercial space and lives in or rents out the residential units can access SBA 504 financing with up to 90% LTV and below-market fixed rates for 25 years. This is one of the most overlooked financing tools for small-scale mixed-use investors in El Paso.
Which El Paso Submarkets Offer the Strongest Mixed-Use Potential?
El Paso's geography, stretching approximately 30 miles along the Rio Grande, creates distinct submarkets with varying mixed-use dynamics. Lender appetite and financing terms differ significantly based on location.
Downtown and Union Plaza represent the highest-profile mixed-use opportunity in El Paso. The concentration of cultural venues, the WestStar Tower, and the Union Plaza redevelopment create momentum that supports new mixed-use projects. Lenders view downtown favorably for properties near completed anchors, though construction financing for speculative projects still requires strong pre-leasing.
UTEP and Cincinnati District benefit from the university's enrollment of roughly 24,000 students and its growing research enterprise. Mixed-use properties combining student housing with ground-floor retail and dining enjoy strong demand and low vacancy. The area's walkability and proximity to the Kern Place neighborhood make it attractive to both students and young professionals.
Cielo Vista and East Side sit along the I-10 corridor near major retail destinations and benefit from cross-border shopping traffic from Juarez. Horizontal mixed-use developments with retail, dining, and residential components perform well in this high-traffic area.
Northeast (Fort Bliss Corridor) serves the military population and growing suburban families. Mixed-use projects combining neighborhood retail with workforce housing attract strong tenant demand and consistent occupancy. This submarket offers lower land costs and faster entitlements than downtown.
Westside and Upper Valley represent El Paso's higher-income residential corridor. Mixed-use opportunities here focus on boutique retail, professional office, and upscale residential combinations that serve the area's affluent demographic.
How Does Cross-Border Trade Influence El Paso Mixed-Use Demand?
El Paso's position as a major international trade gateway creates mixed-use demand patterns that differ from most U.S. cities. Understanding these dynamics is important for both investors and lenders evaluating mixed-use opportunities.
The El Paso-Juarez metropolitan area functions as an integrated economic zone with a combined population of roughly 2.5 million. The maquiladora industry in Juarez employs hundreds of thousands of workers and generates substantial demand for management, logistics, and professional services on the El Paso side, creating natural mixed-use demand for combined office and residential space.
Cross-border retail traffic is another significant driver. Mexican nationals cross into El Paso regularly for shopping, dining, and medical services. Properties near the Bridge of the Americas and the Ysleta-Zaragoza International Bridge benefit from this two-way traffic flow.
The city's Advanced Manufacturing District, a 250-acre development expected to create approximately 17,000 jobs, will further strengthen demand for mixed-use properties. Nearshoring trends shifting manufacturing from Asia to Mexico position El Paso as a logistics hub that benefits from increased cross-border activity.
Lenders familiar with El Paso's border dynamics view cross-border trade as a structural advantage. The diversification of demand sources, combining domestic residents, military personnel, university affiliates, and cross-border consumers, supports occupancy stability that strengthens loan underwriting.
What Steps Should Investors Follow to Finance Mixed-Use Properties in El Paso?
Securing financing for a mixed-use property in El Paso follows a structured process that accounts for the property type's unique underwriting requirements. Here is a step-by-step approach that accounts for current market conditions.
Begin by assembling a comprehensive financial package. For existing properties, this includes trailing 12-month operating statements, a current rent roll separating residential and commercial income, copies of all commercial leases, and tax returns for the past two years. For development projects, prepare a pro forma, construction budget, timeline, and evidence of pre-leasing.
Next, determine your property's DSCR and LTV position. Use the commercial mortgage calculator to model different loan scenarios. Most lenders require a minimum DSCR of 1.25x and will lend up to 75% LTV for mixed-use properties, though SBA programs allow up to 90% for owner-occupants.
Engage a commercial mortgage broker with El Paso market experience and relationships across multiple lending platforms. The difference between programs can be 150 to 250 basis points on rate, which on a $3 million loan translates to $45,000 to $75,000 annually.
Submit to multiple lenders simultaneously to create competition. Plan for 45 to 90 days from application to closing for stabilized properties, and 90 to 120 days for construction or bridge financing.
How Does El Paso Compare to Other Texas Border Markets for Mixed-Use Investment?
El Paso occupies a unique position among Texas border cities for mixed-use investment. Comparing it to other markets helps investors benchmark expectations and identify competitive advantages.
Compared to Laredo and McAllen in the Rio Grande Valley, El Paso offers a larger and more diversified economy with less dependence on trade alone. Fort Bliss and UTEP provide demand anchors that do not exist in smaller border cities. El Paso's population of approximately 679,000 also supports a wider range of mixed-use formats, from high-rise downtown developments to suburban neighborhood centers.
Compared to San Antonio, El Paso offers lower land and construction costs but a smaller tenant pool. San Antonio's tourism economy, anchored by the River Walk and convention district, drives stronger hospitality-oriented mixed-use demand. However, El Paso's lower competition means that well-executed projects can capture market share more quickly.
Compared to Dallas-Fort Worth and Houston, El Paso's mixed-use market is smaller but less saturated. Cap rates typically run 50 to 100 basis points higher than in primary Texas markets, offering stronger initial yields with the trade-off of slower appreciation.
For lenders, El Paso's strengths include stable military and education employment, consistent cross-border demand, and a cost structure that allows mixed-use projects to achieve healthy returns even at moderate occupancy.
For a full overview of all commercial lending options available in the El Paso market, visit our El Paso commercial loans guide.
What Should Mixed-Use Investors in El Paso Watch for in 2026 and Beyond?
The outlook for mixed-use investment in El Paso through 2026 and into 2027 is shaped by several converging trends that investors and lenders should monitor closely.
The downtown revitalization pipeline, including the Union Plaza redevelopment, the Foster tower, and the I-10 deck plaza, will add new inventory to the urban core. Early movers who acquire or develop mixed-use properties in advance of these catalysts stand to benefit from rising property values as the projects come online.
Nearshoring of manufacturing to Mexico continues to accelerate, with El Paso-Juarez positioned as a primary beneficiary. As more companies establish operations in Juarez, demand for management offices and workforce housing on the El Paso side will grow, directly supporting mixed-use fundamentals.
The Federal Reserve's rate trajectory remains the most significant variable for financing costs. If the Fed continues gradual rate cuts through 2026, borrowing costs will decline, improving returns and making more deals financeable. Even at current rates, El Paso's lower acquisition costs allow mixed-use projects to pencil attractively.
The Advanced Manufacturing District, expected to generate roughly 17,000 jobs, represents a major long-term demand driver for the eastern metro. Investors who position early in surrounding areas could benefit from significant value appreciation.
Ready to explore mixed-use financing in El Paso? Contact our team for a free consultation on loan options tailored to your project.
Frequently Asked Questions
What is the minimum down payment for a mixed-use loan in El Paso?
Most conventional mixed-use loans in El Paso require a minimum down payment of 20% to 25%, translating to a maximum LTV of 75% to 80%. However, SBA 504 loans for owner-occupied mixed-use buildings allow down payments as low as 10%, making them one of the most accessible financing options. The exact requirement depends on the property type, borrower experience, and the ratio of commercial to residential space. Properties with more than 50% commercial space generally face stricter down payment requirements.
How do lenders evaluate the residential vs. commercial portions of a mixed-use property?
Lenders typically underwrite each component separately and then combine the analysis. The residential portion is evaluated based on market rents, vacancy history, and comparable properties. The commercial portion receives more conservative underwriting, with higher vacancy assumptions (often 10% to 15%) and shorter assumed lease durations. If the commercial space represents less than 25% to 30% of total square footage, some lenders will classify the property as residential, which opens access to agency lending programs with more favorable rates and terms.
Can I use a bridge loan to acquire and renovate a mixed-use property in El Paso?
Yes, bridge loans are commonly used for mixed-use acquisitions in El Paso, particularly for properties that need renovation or lease-up before qualifying for permanent financing. Bridge lenders evaluate the property's after-renovation or stabilized value, allowing higher leverage than permanent lenders. Typical bridge loan terms in El Paso include 12 to 36 month durations, rates from 7.5% to 11.0%, and LTVs up to 80% of the as-is value or 70% of the after-renovation value.
What zoning considerations affect mixed-use development in El Paso?
El Paso's zoning framework includes several designations that permit mixed-use development, including the Central Business District (C-4), General Commercial (C-3), and Transit-Oriented Development (TOD) overlay zones. The city's comprehensive plan actively encourages mixed-use development along transit corridors and in the downtown area. Developers should work with the city's planning department early in the process, as some areas may require conditional use permits or planned development agreements for mixed-use projects.
Are there tax incentives available for mixed-use development in El Paso?
El Paso offers several tax incentive programs that can improve the economics of mixed-use projects. Tax Increment Reinvestment Zones (TIRZ) provide property tax rebates for qualifying developments in designated areas, including downtown. The Texas Enterprise Zone program offers state sales tax refunds for projects that create jobs in economically distressed areas. Additionally, historic tax credits are available for adaptive reuse of qualifying historic structures, which are plentiful in downtown El Paso.
How does the proximity to Juarez, Mexico affect mixed-use property insurance and risk assessment?
Lenders and insurers evaluate El Paso mixed-use properties based on standard U.S. underwriting criteria. The border proximity does not typically result in higher insurance premiums or more restrictive lending terms for properties within the city limits. However, lenders may request additional market analysis for properties in border-adjacent neighborhoods to demonstrate stable occupancy patterns. The El Paso-Juarez region's integrated economy is generally viewed as a diversification benefit rather than a risk factor by experienced border-market lenders.