TEXAS SNAPSHOT, JULY 2007

El Paso Retail Market

Walker

El Paso has been riding a wave for the last couple of years and does not look to be stopping any time soon. Fort Bliss, which is located in El Paso’s Northeast submarket, is the nation’s fastest-growing Army post and should have a great impact on the city — adding approximately 50,000 residents during the next 5 years. With a substantial number to be living off base, the impact particularly on Northeast El Paso should be significant. Additionally, Fort Bliss is experiencing approximately $2 billion of new construction projects related to its expansion.

The Northeast El Paso area has seen major development of office and retail space around the Wal-Mart at Transmountain Drive and U.S. 54, and now the growth and development have moved north to the Kenworthy Street/U.S. 54 and McCombs Street/U.S. 54 intersections with 400 acres of new residential development underway. The El Paso water utility is in the process of selecting a master developer for a master-planned community of approximately 6,000 acres north of U.S. 54.

On the Far West side of El Paso, off Transmountain Drive and Interstate 10, El Paso’s first outlet mall, The Sun Valley Factory Shoppes, is currently under construction with approximately 400,000 square feet of space. This should draw customers from Mexico and New Mexico as well as have a significant economic impact on the city. In addition to this development, the Far East submarket also has seen a lot of activity, including approximately 950,000 square feet of development. Currently in progress at Montwood Drive and Zaragosa Road is the continuation of three power centers anchored by Target, The Home Depot and JC Penney’s — all being built by River Oaks Properties.

Also in this market, MIMCO, Inc. has wrapped up its fourth phase of the Zaraplex Shopping Center, completing about 195,000 square feet of the project, which is scheduled to be approximately 250,000 square feet when totally developed. Additionally, MIMCO has just announced the construction of a new 70,000-square-foot project at North Loop and Zaragoza Road that will complement the opening of the new almost 80,000-square-foot Pro’s Ranch Market grocery store at the Zaragoza Village Shopping Center across North Loop.

Developments are taking place all over the city due to the tremendous expansion of Fort Bliss, the location of the Future Combat Systems facilities at Fort Bliss, and the first full, 4-year medical school to be built in the U.S. in the last 25 years, which will be open in 2009 (it will be the only medical school on the U.S./Mexico border and it is expected to improve the local economy by the year 2013 by $1.31 billion dollars). In addition to this, the city of El Paso has embarked on a plan to revitalize and redevelop a large portion of downtown El Paso, and a REIT has been formed to assist in the redevelopment. The project is expected to bring new office users, a broad range of retail choices and mixed-use developments to the downtown area.

With the addition of the Outlet Mall, there are approximately 100 new retailers coming to El Paso, some include: Brooks Brothers, Nike, Quicksilver, Le Gourmet Chef and the Disney Store. Academy Sports is currently opening its first two locations in El Paso. Pro’s Ranch Markets, a Hispanic-themed grocer, is opening its first grocery store at the intersection of Zaragosa Road and North Loop, which will be almost 80,000 square feet. Wal-Mart has recently opened a couple of neighborhood grocery stores and continues to look for more locations, with new Supercenters rumored in Far East El Paso and Far West El Paso following the growth in those markets. Many new restaurants have opened in the recent months, including as Pei Wei and Rudy’s Barbecue, each with two locations. In addition, Panda Express and Gatti’s Pizza are both opening their first El Paso locations, and Fuddruckers is opening its third location in the market.

In the future, developers and retailers should keep their eyes on Northeast El Paso, for new home development and the sale of the 6,000-acre master planned parcel, and Far East El Paso, for the booming residential growth and the pending completion of the new Tenet hospital. The Downtown/Central submarket also is one to watch for the redevelopment and opening of the medical school. The city is growing rapidly and becoming one of the strongest border trade markets in the world.

With more than 750,000 people living in El Paso and over 2 million in the El Paso/Juarez, Mexico Metroplex, retailers are starting to notice what the area has to offer. El Paso is in a huge convergence of activity, from new residential product to redevelopment across the market to the expansion at Fort Bliss and the strong growth at the UTEP campus. The additional strong growth in the area’s industrial and office markets is creating a new surge of optimism and excitement in the entire community.

— Scott Walker works in leasing and acquisitions with MIMCO, Inc., in El Paso, Texas.


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