MDH Buys El Paso Industrial Project Before Delivery

Loop 375 Industrial. Image courtesy of MDH Partners

MDH Partners has committed to buying a premier asset in the high-demand El Paso, Texas, industrial market in advance of the speculative project’s completion. The firm entered into a forward purchase agreement for the acquisition of Loop 375 Industrial, an approximately 555,000-square-foot campus, from developer NIT Industrial. MDH relied on internal representation in the forward-purchase transaction, while Colliers represented NIT.

MDH is not only the future owner of Loop 375, but also a lender for the property, having provided NIT with a construction loan to assist in the completion of the project. The financing marks the first mezzanine loan made available through MDH Fund II, which MDH expanded to $750 million in equity in October 2022, and is coterminous with a senior loan originated through Veritex Community Bank.

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NIT has not publicized the development cost of Loop 375; however, the total estimated core and shell building cost alone for the three buildings is approximately $25 million, according to records from the Texas Department of Licensing and Registration.

An upcoming industrial property

The campus is currently taking shape on approximately 36 acres on Joe Battle Boulevard, the frontage road that serves Loop 375 Highway. The development site is 14 miles from El Paso International Airport and roughly 7 miles from the Ysleta-Zaragoza Bridge, an international port of entry that links El Paso to Ciudad Juarez, Mexico.

Upon completion, the complex will consist of rear-load warehouses Building One and Two, of approximately 108,000 square feet each and 32-foot clear heights, and the 339,000-square-foot Building Three cross-dock facility featuring a 36-foot clear height. The project, designed by Goree Architects, will also offer 191 trailer parking spaces and 230 car parking spaces.

NIT expects to deliver Loop 375 Industrial in the third quarter of 2023. CBRE’s Christian Perez Giese and Andre Roacha are on board to facilitate the leasing of the project.

Success south of the border

With the pending acquisition of Loop 375, MDH will establish a half-million-square-foot presence in an area that serves as the logistics hub for a thriving industrial market just outside U.S. borders: Ciudad Juarez, Mexico. Nearshoring is driving warehouse demand in Mexico’s markets neighboring the U.S., including Ciudad Juarez, where many leading global manufacturers maintain a presence

“El Paso’s economy remains robust and is projected to remain strong through the ongoing national contraction. While there is a slight slowing in decisions on new space, the demand, which is tied to manufacturing in Juarez, Mexico, is strong,” according to a report by Cushman & Wakefield.

The industrial sector in both El Paso and Ciudad Juarez is booming. At the close of 2022, El Paso, whose status as an emerging industrial market is only rising higher, recorded its 12th consecutive quarter of positive net absorption and an overall vacancy rate of just 2.7 percent amid heavy construction activity, the Cushman & Wakefield report shows.

Ciudad Juarez recorded 6.2 million square feet of positive net absorption in 2022, marking a year-over-year increase of 13 percent, according to the Cushman & Wakefield research. And the vacancy rate for Class A industrial product in the Mexican city was a rarely seen 0 percent in the fourth quarter of 2022.