Why El Paso's Location on the Border Could Be Its Biggest Economic Advantage

We first talked about this on our YouTube channel back in early 2023, drawing on Peter Zeihan's thesis about the end of globalization. The argument was that as global supply chains break down, manufacturing would shift to Mexico, and border cities like El Paso would benefit. Three years later, the data is backing that up in a big way.

The Original Thesis: Global Supply Chains Are Shrinking

The short version, based on Zeihan's book The End of the World is Just the Beginning: the 75-year era of cheap globalized manufacturing is winding down. Populations are declining in most industrialized countries, capital is getting scarcer, and shipping goods across oceans is getting more expensive and less reliable. Countries that used to outsource everything are being forced to bring production closer to home.

For the United States, that means looking next door. Mexico has the labor force, the proximity, and the manufacturing infrastructure to pick up what China is losing. The term for it is "nearshoring," and when we first covered this topic, it was still mostly a theory that economists were debating.

It's not a theory anymore.

The Numbers Are In: Nearshoring Is Real

Foreign direct investment into Mexico jumped more than 10% year over year to hit $34.3 billion in the first half of 2025, with 36% of that capital flowing directly into manufacturing. Between 2024 and 2025, 400 new nearshoring-related companies set up operations in Mexico.

Total trade in manufactured goods between the U.S. and Mexico reached $791 billion in 2025. Mexico's exports to the U.S. now account for 81% of all Mexican exports. The country is projecting 6% export growth in 2025 and 6.5% in 2026, pushing total external sales toward $700 billion.

The state of Chihuahua, just across the border from El Paso, reached $47.5 billion in export value in the first half of 2025. That's a 35.7% increase over the same period in 2024. Chihuahua is Mexico's top exporting state, and El Paso is its gateway to the U.S. market.

El Paso Is Already Feeling It

This isn't just a macro story. It's showing up in El Paso's industrial real estate market right now.

According to CBRE, El Paso saw net absorption of nearly 1 million square feet of industrial space in just three months at the end of Q3 2024. Over the past two years, the El Paso and Laredo markets combined accounted for over 5% of all U.S. industrial leasing, up from a historic average of about 1%. The five-year average annual return on industrial real estate in these border markets hit 22%, compared to the national average of 15%.

New projects are going up to meet demand. Trammell Crow broke ground on an 800,000 square foot logistics facility in the El Paso area in mid-2025. El Paso is hosting the Manufacturing & Supply Chain Nearshoring Summit because the industry recognizes this city as a key node in the new North American supply chain.

The freight data tells the same story. Cross-border logistics experts project that Texas-Mexico freight corridor volume will break records in 2026, with warehouses filling up in Laredo, El Paso, McAllen, and San Antonio.

The USMCA Review: The Big Question Mark

There's one wildcard to watch. The United States-Mexico-Canada Agreement (USMCA) is up for formal review starting July 2026. By July 1, the three countries must either agree to extend the agreement for 16 years or a 10-year sunset countdown begins.

What was supposed to be a routine review is now expected to be a high-stakes renegotiation. The current administration is pushing for additional concessions from Mexico on labor, rules of origin, and non-trade issues like migration and fentanyl. Currently, about 80% of Mexican exports enter the U.S. tariff-free under USMCA, but emergency tariffs tied to immigration enforcement sit at 25%.

If USMCA gets extended smoothly, the nearshoring trend accelerates. If negotiations get contentious, there could be uncertainty that slows investment temporarily. Either way, the fundamental economics haven't changed: Mexico is right next door, the labor force is there, and shipping from Juarez to El Paso takes hours, not weeks on a container ship.

What Outsiders Still Get Wrong About El Paso

People outside the region hear "border city" and picture something negative. The political narrative around immigration doesn't help. But the economic reality is different from the cable news version.

The border is a trade artery. Billions of dollars in goods cross between El Paso and Ciudad Juarez every year. That relationship is already the backbone of the regional economy, and the nearshoring trend is making it more important, not less.

El Paso has always had a strong foundation: low cost of living (12% below the national average), military stability from Fort Bliss (47,325 jobs and $24.1 billion in economic impact), a bilingual workforce, and a geographic position that's becoming more strategically valuable every year.

What This Means If You're Buying Here

If you're looking at El Paso as a place to invest in property, the long-term trajectory matters. The median home price sits around $250,000, with projections of 2.5 to 4.5% appreciation over the next 12 months. That's steady, sustainable growth, not a speculative bubble.

A city positioned to benefit from one of the biggest shifts in global trade in 75 years, with housing prices that still let you buy a three-bedroom home for what people pay in monthly rent in San Diego or Denver, is a city with room to grow.

The border isn't El Paso's problem. The data is making it pretty clear that it's El Paso's biggest asset.

---

John David Peña is the owner of Peña El Paso Realty Group and host of the YouTube channel "Living in El Paso Texas." Thinking about buying in El Paso? Visit penaelpaso.com.