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Dynamic, Fast Growth Comes to the Four-County Area of ‘Rio South Texas’

Randy-summers

Randy Summers, Davis Equity Realty

It’s safe to say that the Rio Grande Valley, now also referred to as Rio South Texas, is one of the most dynamic and fastest growing regions in the state.

The four-county region at the southernmost tip of Texas bordering Mexico and hugging the Gulf of Mexico consists of Hidalgo, Cameron, Starr and Willacy counties.

With nine ports of entry, five international airports, a first-class deep water port, a population of over 1.2 million and three interstates, it is easy to see why the Rio Grande Valley is one of the largest trade corridors in the world.

Growth in all aspects, including retail, office, medical, education, industrial and housing, brought nearly $700 million in construction permits for all of 2014.

Retail
Sales tax revenue being sent back to the cities continues to increase at a healthy pace. Walmart’s opening of 12 new stores in the region affirms the positive growth and the confidence in the valley. The impact a Super Walmart has is evident with a city’s sales tax revenue. Two new stores in Donna and Elsa increased local sales tax revenue 14 percent and 57 percent, respectively.  Retail sales in the region continue to rise, showing the strength of the local economy.

The McAllen area continues its healthy growth with new restaurants opening in the Palms Crossing shopping center, a Simon property.

Zoe’s Kitchen, Corner Bakery, RGV Cupcake Factory and Saltgrass Steak House have all opened with appeal to the shoppers at Palms Crossing.  A new 150-room, $20 million Embassy Suites will be built within Palms Crossing and adjacent to the McAllen Convention Center.

Simon also recently announced that La Plaza Mall will expand significantly. The demolition of the Sears store in January 2016 will pave the way for the first phase of the expansion.  A newly constructed wing will accommodate an 80,000-square-foot, two-level anchor, two junior anchors, 50 to 60 specialty stores and four to eight restaurants.

The new expansion is scheduled to open in time for Texas’ tax-free weekend in 2017. The property will then expand further with new space between Macy’s and JC Penney. This portion of the expansion will add another 20 to 25 shops and several restaurants. Two new parking decks will also be added to the property. A two-level, 500-car parking deck will be built adjacent to Macy’s to serve the mall.

A second two-level, 700-car parking deck will be built to serve JC Penney, Dillard’s and the mall.
Simon will also upgrade the interior of the mall with new flooring, lighting, restrooms, luxury seating and landscaping. La Plaza Mall continuously ranks as one of the most productive properties in Simon’s portfolio.

The Pharr Town Center in Pharr, Texas, continues move closer to a retail destination with its Houston-based developer, Levcor Inc. recently inking a deal to bring Academy Sports and Outdoors to the center.  The  72,000-square-foot building should open in 2016.

The center, originally known as El Centro Mall, has been gradually rebuilt  with Main Event, Pappadeaux, Luby’s  and Cinemark building from the ground up. World Market is set to open soon within the center.

Chipotle has recently entered the region with several stores planned.  McAllen and Edinburg locations of the fast-casual chain are open; Weslaco, Harlingen and Brownsville locations are under construction. Dunkin Donuts has announced plans for McAllen, Edinburg and Weslaco locations, while Krispy Kreme just announced a new location in Brownsville will open in mid-August.

Davis Equity Realty developed Southgate Center in Weslaco, which includes a Neighborhood Walmart. The company is now pre-leasing the proposed 12,000 square feet of additional retail space.

Industrial
Industry also continues to add vitality to the Rio Grande Valley.  A brand new, 47,000-square-foot HOLT CAT facility recently opened with the promise of 60 new jobs, some of them earning almost $30 an hour. The $10 million facility sits on 35 acres north of Edinburg on the I-69C corridor. Heavy machinery and rental sales in the  growing  road construction, oil and gas industry and agribusiness are just a few of the reasons for HOLT CAT’s expansion.

Liquefied natural gas (LNG) transfer hubs will be constructed at the Port of Brownsville and companies applying for those permits touted thousands of open construction jobs for each facility and hundreds of permanent jobs once the plants are completed in 2020.

Economic Development
The growth in the Rio Grande Valley is allowing many of the cities to improve upon the assets already in place. The City of Weslaco is expanding the runway at the Mid Valley Airport  (T65) to 6,000 feet, as well as widening the runway and building new hangars. The airport is quickly becoming a general aviation reliever airport for McAllen and Harlingen handling corporate travel.

The Harlingen Aerotropolis at Valley International Airport was recently announced and has been designated as a certified site. Lyndsey Myers, senior consultant and director of site readiness programs for McCallum-Sweeny, says communities that are seeking to recruit industrial development need to be armed with a wealth of information and data on both their sites and their community.

Companies are not willing to wait for a community to find an appropriate site and determine its suitability for development. That due diligence needs to be completed in advance of a prospect’s visit. The Harlingen Aerotropolis at Valley International Airport is the first Certified Site in the state of Texas. Harlingen Aerotropolis at Valley International Airport, formerly known as Harlingen Industrial Airpark, consists of approximately 479.5 acres, with all entitlements in place, and is ready for development.

UTRGV/Space X
Along with the numerous positive catalysts running the valley’s economic engine, two new catalysts will be Space X and the formation of Texas’ newest university, University of Texas-Rio Grande Valley (UTRGV). University of Texas-Pan American and University of Texas-Brownsville will merge to create one new unified university which will be a leader in providing higher educational needs in south Texas.

Along with the formation comes a new medical school which has already formed its first class. Higher education is creating tremendous educational job opportunities as  South Texas College, Texas Southmost College and Texas State Technical Institute provide the specialized growing industries that skilled and trained employees need. Add to that Texas A&M University-Kingsville, which has announced plans to offer engineering classes at its citrus center campus in Weslaco.

The second new catalyst is Elon Musk’s Space X.  Brownsville and Boca Chica beach will house the world’s first commercial, vertical and orbital rocket launch facility and STARGATE research facility. The first two confirmed payloads slated for launch from SpaceX’s commercial rocket launch site at Boca Chica beach are scheduled for early 2017.

It will be exciting to see how the space industry changes the face of the region. According to Brad Frisby, the south Texas representative for the research group Co-Star, the four counties making up the Rio Grande Valley currently have 47.8 million square feet of retail space, 34.2 million square feet of industrial space and 12.9 million square feet of office space. Hidalgo County has over 50 percent of the square footage in each category.

Average vacancy rates across the board range from 6 to 8 percent, which constitutes a robust and growing economy in south Texas.

— By Randy Summers, CCIM, president-elect of South Texas Commercial Association of Realtors (STCAR). This article originally appeared in the August 2015 issue of Texas Real Estate Business magazine.

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