South Texas Industrial Market Report
Laredo Market Overview
The industrial segment in Laredo is notable for its access to international markets. It is positioned along the Pan-American Highway that begins in Panama and goes up to Canada. Laredo is also a port of entry between the U.S. and Mexico. The market’s strong position allows the import and export of goods to be the main economic driver here.
Laredo Market Performance
Industrial construction is growing at a rate that is about three times the U.S. average. Just last year, 3.9 million square feet was delivered to the metro. There are 16 properties currently underway that will bring about 2.8 million square feet here upon completion. However, leasing activity aided in stabilizing the vacancy rate, as absorption was positive for all industrial subtypes last year. Logistics spaces led the metro for the strongest absorption levels, with 3 million square feet absorbed.
Apart from the metro’s convenient position on the border, Laredo also notes an average asking rent of $8.80 per square foot. Logistics properties noted the greatest increases in rent growth during the past 12 months, due to the popularity of these facilities in Laredo. Yet, the current asking rent of $8.70 per square foot for logistics properties is lower than the asking rents for both flex and specialized industrial spaces.
The current average price per square foot for an industrial property in Laredo is $89. The average has remained steady throughout the last 12 months, highlighting the stability in the market. Flex properties here notched the highest sale price, which averaged $111 per square foot during the past year.
Laredo By the Numbers
Vacancy Rate: 5.1%
Rent Growth: 2.5%
Last 12 Months | Source: CoStar Group
McAllen Market Overview
One of the strongest job sectors in McAllen is the import of produce between the U.S. and Mexico. McAllen recently notched its place as the fifth-largest metro area in Texas. Population growth aided this standing as it has grown by 3.18% since 2020.
McAllen Market Performance
Throughout the past 12 months through June, McAllen noted the absorption of 550,000 square feet. However, construction levels nearly matched the pace of absorption as 540,000 square feet was delivered during the timeframe. Rental rates have increased by 2.5%, with flex properties noting the greatest uptick with a current rate of $10.14. For tenants in search of lower rents, specialized and logistics properties hold rates of $9.17 and $9.00, respectively.
McAllen stands out with an average sale price that is below the national average. The current average sale price here is $87 per square foot, which dropped from its peak two years ago. Flex properties in McAllen have the highest rate at an average of $138 per square foot, while specialized properties average around $75 per square foot.
McAllen By the Numbers
Vacancy Rate: 3.9%
Rent Growth: 1.9%
Last 12 Months | Source: CoStar Group
Brownsville-Harlingen Market Overview
Brownsville-Harlingen boasts a favorable location for logistics facilities as it is located near the U.S.-Mexico border. The population here is around 2.7 million people, drawn to the area for work at the Port of Brownsville, the University of Texas Rio Grande Valley, and a SpaceX complex.
Brownsville-Harlingen Market Performance
Rents in the Brownsville-Harlingen area have notched some increases in the past 12 months, and the average asking rent is currently close to $7.10 per square foot. Flex spaces here note the highest rent at $13.34 per square foot, with a vacancy rate of 1.2%.
The advantageous location for Brownsville-Harlingen allows the market to note an average sale price of $56 per square foot. While the current average sale price is low, it has remained steady throughout the past two years. The average here is significantly below pricing in the Texas Triangle to the north, which marks the highest prices in Texas.
Brownsville-Harlingen By the Numbers
Vacancy Rate: 5.6%
Rent Growth: 2.0%
Last 12 Months | Source: CoStar Group
Edinburg Market Overview
Similar to Brownsville-Harlingen, the most square footage is taken up by logistics facilities. The market has 2.2 million square feet of this subtype, with specialized space behind it at 910,000 square feet. All of the specialized space here is occupied, with 3.6% of inventory available for logistics properties.
Edinburg Market Performance
Vacancy here is low at 2.8%, but this rate has increased by 1.4% over the past 12 months. Rents have gone up by 1.1%, and now the average asking rent stands at $8.50 per square foot. Flex properties have the highest rent here at $12.20 per square foot.
Edinburg By the Numbers
Vacancy Rate: 2.8%
Rent Growth: 1.1%
Last 12 Months | Source: CoStar Group
