EL PASO, TEXAS Market Overview

2014 CBRE Global Research and Consulting

INTRODUCTION El Paso, also known as “The Sun City,” is the sixth largest city in Texas and the birthplace of America’s Southwest. Today, El Paso is a thriving community with active investments across the area ranging from redevelopment to new infrastructures. Notable for being the safest city in the Unites States, El Paso is also a vital part to one of the largest borderplex metropolitan economies in the world as the focal point of more than $85 billion dollars in annual trade between the United States and Mexico.

From the captivating relics of the historic Old West to the Franklin Mountains, El Paso has retained its unique history, celebrates its present prosperity, and looks eagerly toward a promising future.

Geography El Paso is located at the western tip of the state where Texas meets the state of New Mexico and form an international border with Mexico. Within minutes, El Paso commuters may visit one of two neighboring sister cities, one in a neighboring state and the other in a neighboring country. Las Cruces, New Mexico lies at 46 miles away, while Ciudad Juarez, Mexico is less than a two mile commute from city center. Situated on the geographic center of the 2,000 mile United States / Mexico border, El Paso, Las Cruces, and Ciudad Juarez seamlessly blend diverse cultures and traditions.

Rising over 3,280 feet above the surrounding basin, the Franklin Mountains dominate the El Paso skyline and offer mountain biking, hiking, and rock climbing virtually any time of the year for outdoor enthusiasts. Located in the northern Chihuahuan Desert, El Paso features a great diversity of landscapes and is home to hundreds of species of unique plants and animals. The local region features a climate that averages 297 days of sun during the year, an average temperature of 95 degrees during the summer and 60 degrees during winter.

Population Currently the nineteenth largest city in the United States and the sixth largest in Texas, the City of El Paso has a population just over 674,000. Its metropolitan statistical area, El Paso County, is home to over 827,000 individuals with a projection growth to nearly 910,000 by 2017. El Paso is among the fastest-growing metropolitan areas in the nation with an average growth per-decade of 21% from 1960 to 2010. In more recent time, El Paso has been ranked as one of the fastest growing cities since the recession with a growth of 12% since 2007. According to a recent report by the UTEP Border Region Modeling Project, El Paso is projected to reach a population just shy of one million by 2029.

© 2014, CBRE, Inc. Mar 2014 Oct 2013 May 2013 © 2014, CBRE, Inc. Dec Dec 2012 Jul 2012 Feb Feb 2012 Sep Sep 2011 Apr 2011 Nov Nov 2010

Jun 2010 Jan 2010 Aug 2009 Mar 2009 Oct 2008 May 2008 Dec Dec 2007 Jul 2007 250 245 240 235 230 225 220 215 210 205 200 Index CBRE Research, August 2014. of Dallas, Source : Federal Reserve Bank FIGURE 1: EL PASO METRO BUSINESS CYCLE INDEX METRO BUSINESS CYCLE FIGURE 1: EL PASO Association Realtors, of home sales continued on a healthy The units of amount sold duringthe trend year-to-date 2014. from the and same time 23.9% up last is year, month June 2013 year-to-date 8.6% up from the same period last 2013. in In addition, El Paso recordedInaddition, Paso El a gross metropolitan product (GMP) Analytics Moody’s (C$). also reports 2013 in billion a $27.1 of steady growth GMP in at average an 3.5% of per year through for the year 2015. and as 4.4% as much 2018 Estate Real Residential The residential real estate market continues Paso El in to According improve. most to recent reportthe by Greater Paso El 2013 data Center from the for Border Texas and Economic 2013 Enterprise Development show that the district Paso El ports trade all of with billion, entryof or $86.1 account for 20.9%, Mexico. The district Paso El the is second largest only after the Laredo region / South which accounts Texas for 59.1%. Growth Economic Recession / economy managed weather to Paso’s El the recession better than othermany metropolitan economies the in country. InstituteBrooking’s Rankings noted as one Paso the El of strongest metroeconomies during the recession. This may be attributable a fairly to stable the housing market, expansion Fortof Bliss, and the cost low doing of business Paso El in 22%which is lower than the national average. did Paso El factin enter a recessionary period early in 2008, however, it has been on steady a recovery state since September of 2009 as illustrated the by upward trend the in Federal Reserve Bank Metro Paso El Dallas’ of Business Index Cycle (October movements broad the summarizes index The ). 1980=100 real rate, unemployment the employment, nonagricultural in wages, and real retail sales. more than $411.6 billion. more than $411.6 increased by 189 % from $81.4 billion to $235.5 billion. Through billion. $235.5 to billion % from $81.4 increased 189 by trade increased additional an by billion. 53% to$360.4 2010, trade annual total between the U.S.In and 2013, Mexico was Trade betweenTrade these neighboring economies has evolved significantly withEl Paso /Ciudad Juarez as a majorcorridor. 2003, to trade total between 1993 From the U.S. and Mexico them and seems their cyclical have to evolved; movements have inclined become to roughly contemporaneous. Ramos-Francia from Banco de Mexico notes that after NAFTA, the correlation between Mexican and U.S. manufacturing output became stronger; a significant long-run link between Trade AgreementTrade (NAFTA) was enacted, research shows that there was escalation an economic in integration between U.S.- Mexico border city-pairs. Published research and Chiquiar by industrial expansion as a result trade of liberalization and other forms business of deregulation between border economies. North the perhapswhen Free American After mid-1990s, the economic research hasbecome attractive recent in decades due partin the to acceleration demographics, in and commercial, that because factors of as such geographical proximity and economic these linkages, two economies have progressed fromcompeting witheach other being to complements.Border Cross-border trade is a significantconditions component along the U.S. and Mexico It no of is surprise border. of economic Additionally, Additionally, several topics of importance can include businessTopics cycles transmissions, exchange rates, be identified. industrial and development, labor markets, just nameto a few. Regions like El Paso face influence not only fromU.S. business cycles but also national business cycles Mexico, in as well as regional business patterns the in neighboring border city. going back to 2007. going back 2007. to Economy States. In fact, the Press CQ has named asthe Paso El safest city in the U.S. with a population greater than 500,000 five Prioryears thatto ranked thein Paso El now. top a row threein Crime Rate noted is Paso El be to among the safest cities the in United 2.4 million individuals in 2010. This U.S. – Mexicoborderplex individuals 2010. in million 2.4 region the is and most second populousthe Texas in in nation only the to borderplex San Diego Tijuana – 700 milesover away. Ciudad Juarez whose population is over 1.3 million, and LasCiudadJuarez million, whose population 1.3 over is Cruces M.S.A. whose population exceeds Paso/ El 209,000, Juarez / Las Cruces compose a combined statistical area of When data Paso El are combined withdata from sister city

2014 El Paso, Texas | Market Overview 2 2014 El Paso, Texas | Market Overview 3 9.6 56.0 9.0 9.0 3.1 1.0 1.4 1.4 1.2 1.2 1.2 1.8 1.8 1.8 1.3 1.5 1.5 0.9 0.9 4.0 0.7 4.6 5.0 4.3 2.5 2.5 8.0 0.8 0.8 0.8 0.6 0.5 (000) 12.7 46.4 46.4 34.4 Employees Employees (000’s) # of Employees Number of Employees of Number Industry State and Local Government The University at Paso El Texas of El Paso Community College Dish Network Alorica Center Science Health Tech Texas GVSL RM Personnel Inc. Healthcare Paso El Systems Ltd. Genpact Sun Apparel Ltd. Texas of Automatic Data Processing, Inc. Electric Paso El Corp. Visiting Nurses Association Paso El of Las Palmas Medical Center West Customer Management Group Redcats USA Inc. Union Pacific RailroadInc. Co. Western Refining Datamark Coca-Cola Enterprises Public Profile Federal State Local El Paso I.S.D. Paso El I.S.D. Ysleta Staff ManagementT&T Socorro I.S.D. VF Jeanswear Wal-Mart Stores Inc. Hospital Ltd. Tenet Center University Medical Copr. Healthcare Allegiance GC Services Del Sol Medical Center Top ElPaso Top Employers Fort Bliss NAICS FIGURE 4: PUBLIC EMPLOYERS FIGURE 3: EL PASO EMPLOYERS PASO 3: EL FIGURE FIGURE 5: LEADING INDUSTRIES Impact annually billion $6.0 61,957 jobs compensation in billion $4.2 and labor income Employment: Compensation: Area Impacted Area Business volume or output: Concurrently, BloombergConcurrently, fifth ranked Paso El jobin growth since its also ranked peak). fourth Paso El on Forbes “Best Magazine’s Mid-Size Jobs”. for Cities employment projected is per at average grow an to year 2.6% of In fact, Bloomberg Businessthrough recently 2018. Week ranked “Forty in number Paso 10 El Strongest U.S. Metro Economies”. are employed. According Analytics’ Moody’s to most recent unemployment ratereport, projected is Paso’s El decline to the in coming years narrowing the gap with pre-recession levels. Total a presence in El Paso or Ciudad Juarez. One, Western Refining headquartered is Paso El Paso. El in ranked at number 281, currently has labor a civilian force 323,600 of whom of 300,750 With favorable demographics and regional accessibility, El a desirable is Paso destination nationally for many recognized firms.Today more than75 of thefortune 500 companies have Employment FIGURE 2: FORT BLISS ECONOMIC IMPACT FIGURE 2: FORT indirectly, make to the economyto indirectly, make Paso estimated El is as follows: expenditures on Fort Bliss and its Beaumont William Army Medical Center(WBAMC). Furthermore, the economic overall contribution that Fort Blissand WBAMC, both direct and output, $32.6 million in labor in million and household $32.6 andoutput, an income, incremental 833 jobs havebeen generated County Paso El in due construction to eachover last of three years, 2011-2013, region according helped CNN to “dodge Paso, El Money, the The Instituterecession”. and Development for Policy Economic in million at UTEP estimates that average an $111.7 of Undeniably, FortUndeniably, Bliss has become a vital component the of El A notable regionalPaso contributioneconomy. the is recent Fort billion $5 Bliss base expansion. Such investment the to The post supports including population a 170,000, over of veterans, retirees, members. and family the biggest base transformation history. in According the to S. DepartmentU. Defense, of Fort Bliss currentlyis home to active reservist, duty, members, family and civilians. 91,817 from institutional an training facility a major into mounted maneuver training post recent in years. It estimated is that in the last decade Fort alone, Bliss has tripled size in making it Fort Bliss,one the of largest militarycomplexes the of United States lies theto Army, east andnortheast the of Covering city. acres, the million post has transformed areaa total 1.1 of FortBliss © 2014, CBRE, Inc. © 2014, CBRE, Inc. area. Perhaps the most notable regional investmentsare the QualityLife of Bonds. The two bond measures include for parks, million recreation, open space$245 and zoo multi- cultural, for museum, improvements and $228.25 purpose performing arts and entertainment and library facility improvements. prominent Equally the is current downtown was registered that the construction the of retail 85-95 spaces generated at least 350 jobs during construction and permanent1,200 retailjobs. One cannot denythe success recession. recent the despite mall outlet the experienced by This may be attributable highly the to lack outlet-mall similar of style retail region our in at a 300-plus-mile radius. Recently, The Outlet Shoppes 43,900 announced at Paso million, El a $6 ft.sq. addition The with expansion a major anchor retailer. will add 50 jobs during construction and 200 permanent retail jobs when completed. retail activityOne must note that Paso’s notis El only subject to the demand shoppers. Paso El of Surrounding area residents Ciudadof Juarez, Las Cruces, and City Chihuahua are all located within the retail trade People make area Paso. El of both in wayacross directions,the border, ona daily basis to purchase goods and services. This response in is differences to varietiesin and adjusted prices as well as laws, policies, and consumersafety regulations. Itestimated is that exportsPaso El of retail sales to Mexican10-12% nationals, a vital figure that annually. billion translates more to than $1.3 Initiatives Future / Current / Recent Recent growth driving is the need for investments across the Universidad Autónoma de Ciudad Juárez, Instituto Tecnológico de Ciudad Juárez, Universidad Autónoma del Noreste, Universidad are some the of higher Tecmilenio educational institutions present the in CiudadJuarez, Mexico region. ActivityRetail The retail expanding market is Paso El in continues Paso as El out the of move to recession. In the last decade, with the exception the of recession years 2008–2009, of retail total saleshave grown yearon yearafter having been adjusted Withan annual for seasonality and inflation (2014:Q1=100). retail Paso’s El sales in billion since 2010, average $10.7 of This 2013. in billion market experienced sales total $11.1 of since2009. 16.7% figureby up is retail market thriving is with active Paso’s El investments Today, across the area. Perhaps one the of most noticeable regional 600,000retail investments million, the is current ft. sq. $70 Theat Farah. 60-80Fountains tenant retailproject opened its and has since attracteddoors late in 2013 major retailers and fine dining tenants. is The Outlet Shoppes which opened at Paso, El 2007, in a 380,000 sales. in million It ft. sq. retail outlet with $150 7.8 4.9 3.9 2.4 3.4 3.4 6.4 5.6 5.6 6.6 6.6 3.5 12.7 24.7 10.2 34.4 Grocery stores Department stores High-tech employment As employment total % of Employment services trucking freight General Officesof physicians Building equipment contractors Automotive repair and maintenance Federal Government Federal Home health care services Business support services stores merchandise Other general General medical and surgical hospitals Military Personnel Restaurants and other eating places 8111 4451 4521 4841 6211 2382 5614 4529 ML 7225 GVF 6221 5613 6216 Business College offer higher education opportunities the to region. University, Southwest University, Howard Payne University, University, Payne Howard University, Southwest University, as vocational well as many and technical schools, include to VistaWestern College, Kaplan College, and International Tech, Additional institutions have educational an presence the in area. The University Phoenix, of University, Park Webster has student a total base 28,200 of and has become a prime education institution southern in New Mexico. NMSU offers doctoral master’s 56 bachelor’s, 89 and 24 degree programs. New Mexico State University located is neighboring in city of Las Cruces with other campuses the in surroundings. NMSU 2,500 individuals, offers programs study of a student to 160 base of over 25,000, and has five campuses throughout the area with plans a sixth. of Texas Tech University Tech Health Texas home which is to Science Center, medicalthe School only four-year / southern west in Texas New Mexico. Furthermore, CommunityPaso El College employs over 23,000over Master’s students and 76 bachelor’s, their in 71 doctoral20 degree programs. UTEP currently is celebrating its Also located the is Paso centennial El in anniversary 2014. in million, 4,000million, employees, and annual close $80 in to million research spending. Part the of University system, Texas of UTEPa major is research universitywith enrollment annual an the region with more than 26,000 jobs. The University Texas of at El Paso (UTEP) is perhaps the most significant educational institution the in region with budgetannual an $418 over El Paso is a key regional a key is center Paso El for higher education, which promotes three future larger economic school growth. Paso’s El districts are among the largest employers the in supplying area, Education

2014 El Paso, Texas | Market Overview 4 2014 El Paso, Texas | Market Overview 5 Ciudad Juarezhas also undergone notable investments in infrastructures.highway One the of singlelargest, Periferico The million $65 Camino Real wascompleted 2007. in miles extendshighway and connects 15 the southern region of Ciudad Juarez with the north east region/west-El Paso/Santa EffortsTeresa. continue urbanize to a multi-phase project in San Jeronimo. San Jeronimo, MX located the in west region of the municipalityJuarez. of The proposed project million $35 include developingwill industrial and commercial properties, as well as several thousand homes meet to the demand in- of migrating residents. The project expected is begin to late 2014 two in phases. and continue through 2016 Loop 375 sevenmiles from the to west downtown Paso city’s El Loop 375 side and the dollar downtown already million approved $90 streetcarproject that carries estimated an economic impact above $360 million. Within Fort Bliss, Construction has begun on the $648 replacementmillion Beaumont William of Army Medical The projectCenter. consistwill a seven-story of two hospital, clinic buildings, administrative building, clinical investigation building with biosafetylevel three laboratories, and central ft. sq. million project projectedis utility create to The plant. 1.1 jobs1,000 during construction and should be completed by 2016. Fall delivered officially was facility intermodal Pacific Union new The one year May, in ahead schedule. of The $400 2,200 million, acre rail facility connects the region and Houston, to Chicago, Los Angeles. The intermodal has hub lift annual an capacity 225,000of container and trailer containers as well as 1,266 parking stalls, both be which will of expanded the by end of Thefacility located is NM Santa in which Teresa, the 2014. borders with San Jeronimo,MX located the in west region of the municipality Juarez. of Even more projects are on the horizon, including the massive $600 Border million Highway West project that extend will August, 2014, The Texas Department The Texas Transportationof had August, 2014, active projects County Paso El in with estimated an 114 total from the same time 2013. in 37.5% up billion, cost $1.1 of infrastructure projects across the There city. have been many completed within the last several years. Spur One which, of had 601, a price tag of $367 million. As of the first weekof in 2012, and 64.2% in 2013. and 64.2% 2013. in 2012, in It greatof is worth noting the large highway of volume on the East Side town of and NM. one Santa is Teresa, and two renovations for proposed hotels Downtown. in Paso El 65.5% 2011, in County hotel occupancy rate averaged 67.6% El Paso has Paso recentlyEl seen a surge new in hotel construction. there new were hotel more than 10 2009From through 2011, openings. there Currently, are two hotels scheduled open to facility The project revamp. includes runway construction, a loadingnew taxiway, bridges, and facility. a new car-rental Also part the agenda of Paso El the is renovation The of Paso El International Airport. The million project expected an is $139 buildings. The campus transformation project have will a cost million. of $25 quality-of-life project. The eight projects the improve to aim will aesthetical andpedestrian commuter experience improvingby pedestrian walkways and green spaces knit to together campus construction projects. Having invested in $200 million over recreationa center, pastthe five-yearsbuildings, three new on and a parking garage, UTEP recently began in-campus an of 10,135 on July 3rd, 2014. on 2014. July 3rd, 10,135 of The University also is undergoing at Paso El major Texas of 28th, 2014, the El Paso Chihuahuas have the Chihuahuas had Paso El outstanding an 2014, 28th, support from park the The community. 9,500 capacity has been home sold games out 42 of 32 with a record attendance $76.8 million, labor income of $22.6 million and 612 jobs. and 612 million labor income $22.6 of million, $76.8 expected generate is to spending event-related Furthermore, million $17.9 annually. Since the first home game on April which an affiliate to the San Diego Padres Major League team. League Major Padres Diego San the affiliateto an which ballpark million have will an The construction the of $76.1 estimated economic impact (direct, indirect, and induced) of Another essential investment in the center of town is the the is town of center the in investment essential Another recently inaugurated downtown baseball park. The park homeis Triple-A the Chihuahuas to Paso El baseball team to theto Millsdowntown Building, living space, the San Jacinto andPlaza, the to area wayfinding. of private investment totaling more than $241 million as of 2012, as 2012, of million private investment more totaling than$241 downtownbeing is reborn while preserving and emphasizing Plan includes investmentsits rich history. The Downtown 2015 redevelopment and revitalization plan. With a total public and and public total a With plan. revitalization and redevelopment © 2014, CBRE, Inc. , we © 2014, CBRE, Inc. El Paso #4 The Best Cities Home For Buyers Movato Blog 2013 – El Paso #5 Best Places for Business and Careers – Cost of Business Rank 2013 Forbes – August 7, Forty Strongest U.S. Metro Economies – Job Growth (since peak) Bloomberg Businessweek – 2009 In Depth: America’s Strongest 25 Housing Markets Forbes – 2009 El Paso #7 National University Rankings - UTEP MonthlyWashington – 2013 El Paso #10 Forty Strongest U.S. Metro Economies – Overall Rank Bloomberg Businessweek – 2009 El Paso #11 Best Places for Business and Careers – Job Growth Rank 2013 Forbes – August 7,

completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be completeness. This information is presented exclusively for use by CBRE clients and professionals reproduced without prior written permission of CBRE. DISCLAIMER to be reliable. While we do not doubt its accuracy Information contained herein, including projections, has been obtained from sources believed to confirm independently its accuracy and have not verified it and make no guarantee, warranty or representation about it. It is your responsibility FOLLOW CBRE FOLLOW 221 N. Kansas,221 Suite 2100 El Paso , TX 79901 5853883 915 T +1 For more information about this market, please contact: EL PASO OFFICE U.S. News – September 2008 The Best Mid-Sized Cities Jobs For Forbes – 2012 Movoto Blog – May 17, 2013 Movoto Blog – May 17, CitiesThe 10 Most Safe From Natural Disasters Movoto Blog – 2013 El Paso #3 Best 10 CitiesTop toRaise a Family in America 15 U.S. Cities’ Emerging15 Downtowns Forbes – 2013 Best Cities for Lovers Pet El Paso #2 Forbes – 2011 Ballpark of the Year Baseballparks.com – 2014 CQ Press – 2013, 2012, 2011 2012, PressCQ – 2013, The Best Mid-Sized Cities Jobs For Rating and Rankings El Paso #1 Lowest Crime Rate Ranking – Cities of 500,000 or morepopulation Area Offices

2014 El Paso, Texas | Market Overview 6