Port, Diverse Economy Drive Growth in Corpus Christi Real Estate Market
When people come to Corpus Christi, many of them expect to find a community that has been devastated by the downturn caused by the oversupply of cheap oil and gas. They expect a community with rising unemployment and vacant buildings. Based on the past, they would be correct.
However, Corpus Christi and the Coastal Bend have been experiencing a major transformation of their economy, which is now much more diverse.
This is partly because of the leadership, hard work and vision of its people, and partly because of good luck caused by the infrastructure that had been put in place by the Port of Corpus Christi. This infrastructure was at the right place at the right time.
The Port of Corpus Christi has always been a driving force and major contributor to the economy of Corpus Christi. The port’s leaders knew that if they didn’t make some major changes, they would not remain competitive.
The Port of Corpus Christi is the fifth largest port in the U.S. in total tonnage.
However, because of the depth of the port channel and the height of the harbor bridge which crosses over the port, the newer, larger ships could not enter the port.
Port leadership decided to take an 1,100-acre tract of land located close to the town of Gregory, which is at the end of the La Quinta Channel, to be used for the larger ships and possible container storage.
In 2009, the La Quinta Trade Gateway Terminal Project was born. Permits were received to deepen the channel and development had begun on the project when the first major manufacturer, Tianjin Pipe Co. (TPCO) of China made a commitment to build a $1 billion steel mill to make seamless steel pipe for the energy industry.
The 1.6 million-square-foot plant is the largest single investment in a U.S. manufacturing facility by a Chinese company.
Then, an iron plant was proposed by Austrian Voestalpine Group, taking a site right on the La Quinta Channel. Cheniere will also be building a liquid natural gas plant estimated to cost in excess of $12 billion. Bechtel Corp. has been awarded the contract to build the facility, with all permits in place. All of the projects are under construction or about to start.
Another major project located on the north side of the Port of Corpus Christi will be built by the Italian M & G Group, which will produce PET resin for plastic bottles. This resin is made from a by-product of natural gas. This project will cost approximately $1 billion.
Because Corpus Christi and surrounding communities have among the cleanest air of any industrial community in the nation, and now because of cheap natural gas, more companies have announced plans to enter or expand in the market. The total investment by these companies currently tops $25 billion.
As oilfield exploration companies abandon their facilities, companies with ties to the new plants have been taking their place. The jobs generated by the new companies do not pay as well as oil and gas exploration, but they are still well-paying jobs. It is estimated that at the height of construction, these new projects will employ over 15,000 construction workers.
While this activity has generated a need for housing, multi-family projects that have already been built and those that are planned should meet the current demand. Developers are cautious and do not want to repeat the overbuilding that has happened in the past.
Developers and investors are being cautious and are also not willing to build speculative warehousing. It is assumed that once all of the new construction has been completed, many of the workers will be moving to follow the construction of new plants. Single family homes and retail are the only sectors where speculative building is occurring.
Most of the new retail projects have been smaller strip centers, emergency centers and new restaurants. Emergency centers have been taking spaces vacated by video rental stores.
Numerous national and regional restaurants are expanding, including Chick-fil-A and Chuy’s. One site near Rodd Field Road and Saratoga Boulevard and another site at FM 1889 and Northwest Boulevard have new grocery stores planned.
The largest recent announcement is for a new 600,000-square-foot power center at the corner of Rodd Field Road and State Highway 358.
The site was going to be the location of a new Costco Wholesale, but negotiations fell apart last year.
It has not been officially announced, but sources say the deal is back on with new developers led by Bill Morris, formerly of Trademark. Leasing will be handled by The Retail Connection.
The city is way overdue for a project like this. It is anticipated that the relocation of new stores will make room for retailers that cannot justify rental prices for new construction.
Portland, a bedroom community of Corpus Christi and the closest city to the new plants mentioned earlier, is experiencing activity in all sectors.
Portland will not allow new industrial development, so those uses are going to Corpus Christi, Aransas Pass and Ingleside. Most of the development in Portland is single family homes, retail and restaurants.
The Corpus Christi office market has been helped by the banks, which have been growing and looking for new space.
One recent major sale of an office building is the former Bank of America building on Shoreline Boulevard, which changed hands in 2014.
Bank of America had been downsizing and was not willing to sign a long-term lease. The new owner replaced them with Plains Capital, a bank new to the area.
A tremendous amount of remodeling and upgrading is under way to allow the building to be more competitive. The adjacent Prosperity Bank building has also been sold to First Community Bank. Prosperity Bank is moving to a free standing bank building down the street from its old location.
Kleberg Bank has purchased the New York Life Building, which had been taken back by the lender.
Kleberg plans on moving into the building and doing extensive remodeling. This building is located on the South side of Corpus Christi at the corner of Williams and Staples.
The Tower II office building has been purchased by the Ed Rachal Foundation. The foundation will be moving its headquarters into the building and is also planning extensive renovation.
The Harbor Bridge built in 1959 is being replaced with a taller structure which should provide 65 extra feet of clearance for bigger ships. The bridge should be completed by 2020 and will cost close to $1 billion.
— By Matt Cravey, president, Cravey Real Estate. This article originally appeared in the October 2015 issue of Texas Real Estate Business.