Kris Collins,
Greater Waco Chamber of Commerce
Greater Waco’s economy is on a roll. Positioned halfway between Dallas and Austin, Waco is a prime destination for companies and individuals that want access to large metro areas without the hassles of traffic, expensive real estate and labor shortages.
With newly completed facilities, such as Baylor University’s McLane Stadium and major downtown redevelopment projects, Waco is hitting the radar for new development opportunities.
September 2014 marked 26 months of positive economic growth for the area, with 6.2 percent growth in the third quarter of 2014 alone. Major players, including Baylor, have played a tremendous role in elevating the status of Waco as a dominant player in the Central Texas region. Just as Texas has seen significant growth since 2008, so too has Waco.
One major contributor to Waco’s economic success has been employment growth. Employers are creating new jobs in the area, with 1,500 more positions now in place, 108,200 compared to 106,700 in September 2013. Construction, manufacturing, healthcare, hospitality and logistics remain strong drivers for the economy. The result is a community with a 5 percent unemployment rate and residents with more disposable income.
Retail Developers Step Up
Spending was up 5.1 percent through the first nine months of 2014 when compared to the same period last year, resulting in continued increases in sales tax collections for Waco. That trend has caught the eye of retail developers, including Dallas-based Leon Capitol Group.
The developer has been acquiring properties in the Waco area, focusing on the I-35 corridor. Currently, Leon is redeveloping an 18-acre tract at the intersection of I-35 and Valley Mills Drive. The site, a former high school, is a prime location for retail development. Minnesota-based Gander Mountain completed a 52,000-square-foot retail facility in October, and plans for the balance of the development include a hotel, restaurants and additional retail.
Additional retail development is underway throughout greater Waco. Central Texas Marketplace, a 100-acre master-planned retail center located at the intersection of I-35 and State Highway 6, has seen increased activity. Big-box retailers are taking notice of the untapped market in Waco. Cabela’s chose Waco for the site of its second “Outpost” concept in the U.S., offering a reduced footprint for smaller markets.
Additionally, there are 10 national retailers entering the development, not to mention the significant hotel properties underway at Legends Crossing, a neighboring mixed-use development.
Developers note the availability and affordability of real estate, the strong economy, growing population base and market potential as driving influences for investment.
However, development opportunities outside of retail are also abundant in the Waco area. The community has been fortunate to attract new industry to the area while growing its existing industry base. Since 2006, Waco has attracted 30 new industrial businesses to the area and seen more than 55 expansions. This has resulted in nearly $1 billion in new capital investment, more than 6,700 new jobs and nearly 5.8 million square feet in new construction and absorbed real estate.
The continued growth in the area has reduced what was already a limited inventory of industrial buildings. Waco’s current industrial vacancy rate is sitting at 4.2 percent, although that number is expected to further drop following the execution of several leases on available buildings.
The continued strength of Waco’s industrial sector has created new opportunities for speculative development, particularly in Texas Central Park, a 3,500-acre master-planned industrial park owned by the Waco Industrial Foundation. Home to more than 85 companies and 12,000 employees, including Caterpillar, Coca-Cola, Allergan, Tractor Supply, Sherwin-Williams and many more, Texas Central Park is the epicenter of industrial activity in the Waco area.
A Revitalized Downtown
Movement back into the urban core has driven substantial investment in downtown Waco. Nearly $600 million in investment has been completed or is underway, not including the new $250 million McLane Stadium.
Currently, more than $350 million in proposed projects are in development. Developed projects have ranged from mixed-use development to retail, hotel, student housing, major historic facility renovations and more than 962 new residential units since 2007, with additional capacity for growth.
Shane and Cody Turner of Turner Developments, hometown boys turned developers, have undertaken major redevelopment projects along Waco’s Austin Avenue, most recently completing a two-year renovation of Waco’s historic Hippodrome Theater. The theater now features in-house dining and first run films, complete with a bar and restaurant.
There is also an attached live music and performance venue. This is just the newest of more than two dozen restaurants and bars that now call downtown Waco home, in addition to the eclectic specialty shops that are developing within the area.
With the increasing residential and employment population in the downtown area, office space is a prime opportunity for development. As with industrial space, available office space (without medical space) enjoys extremely low vacancy rates, currently 2.3 percent.
To say that Waco is growing is an understatement. The time for investment is now and the potential for continued economic success is here.
— By Kris Collins, Greater Waco Chamber of Commerce. This article first appeared in the December 2014 issue of Texas Real Estate Business magazine.