El Paso Deep Dive
Hi ,
We're data nerds. This probably comes from our backgrounds in high-volume ecommerce from early in our careers. Or maybe it's just because I'm a nerd.
One of all-time favorite reads was a 2015 blog post from Airbnb's in-house cartographer explaining the challenges of defining the lines of hot neighborhoods.
For example, if I'm traveling to New York and love staying in the West Village, if I arrive at a listing that said it was in the West Village but actually it was waaaay north of what any New Yorker would consider the West Village, I'll be unhappy.
These kinds of deep technical problems are catnip for nerds like me.
Trend Predictions
Our industrial real estate business is about investing in macro economic and population trends squared against very detailed micro trends in each of the markets we invest in.
A centerpiece of our thesis is making long-term investments in demand from a particular type of quality tenant type. We invest across a few specific strategies, but each of them lines up to the same future outcome. We want to assemble a portfolio of a particular type of large-suite industrial real estate, occupied by a consistent credit-quality tenant type, and exit assets in portfolio sales to institutional acquirers who value scale and consistency.
If we are going to make a long-term bet in a market, we need to understand not just industrial demand as a whole, but also what kinds of tenants make up that demand. And we have to decide whether we believe the good trends will continue.
15 Minute Market Deep Dives
One of our team members, Conner Parker, spends most of his days analyzing potential investments. To do that well, he spends countless hours understanding macro and micro trends in each market so that when we're evaluating an actual investment, we have the knowledge needed to see it clearly, beyond just the economics of the deal itself.
He's started wrapping some of his learnings into internal presentations that we want to share with our partners.
These market deep dives aren't just about industrial. They also study relative housing affordability, construction permit pipelines, and industrial employment types. Conner loves finding random correlating data points.
El Paso
El Paso is one of our favorite markets. While its commercial border traffic isn't as significant as Laredo's (market deep dive coming soon), its employment and residential growth over the past 10 years has been staggering.
It's also seeing some of the most aggressive speculative industrial development in the Industrial Heartland with 10M SF of delivered product over the past five years, almost all of which was absorbed well.
It has some housing affordability issues, with home prices rising 55% over the past five years while median income growth lagged with 26% growth.
Conner reviews a ton of factors including industrial job category growth, housing affordability, and more.
These deep dives are very much internal streams of thought. You'll see some of our questions and follow-up items. Things we don't know that we want to know. This is very much inside baseball but we thought our partners would enjoy watching them.
Let us know your thoughts. Should we keep sharing?
