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 wanting 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.
October 2015 marked 43 months of positive economic growth for the area, with 4.8 percent growth in the third quarter of 2015 alone. Major organizations, including Baylor, continue to aid 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 1,600 more positions now in place, 113,700 compared to 112,100 in October 2014. Construction, manufacturing, healthcare, hospitality and logistics remain strong drivers for the economy. The result is a community with a 4.8 percent unemployment rate and residents with more disposable income. In fact, real median household income for the Waco MSA grew 5.8 percent, to $43,184, between the end of 2013 and the end of 2014.
Retail Growth
Retail spending is up 4.5 percent through the first ten months of 2015 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 national developers, leading to the redevelopment of not only downtown properties, but also major commercial intersections throughout the community. Dallas-based Leon Capitol Group continues to buildout its investment properties along Interstate 35.
Its 18-acre tract at the intersection of I-35 and Valley Mills Drive now includes Minnesota-based Gander Mountain, Zoës Kitchen, Bubba’s 33 and more. A hotel is currently under construction and additional restaurants and retail are planned.
Other retail developments in Greater Waco include Central Texas Marketplace, a 100-acre master-planned retail center located at the intersection of I-35 and State Highway 6, which has seen significant growth over the last 12 months and is quickly nearing complete build-out. “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., which offers a reduced footprint for smaller markets.
Additionally, more than 10 national retailers entered the development in 2015, with more planned for 2016. With hotel occupancy strong as shown by the 11.4 percent increase in Hotel Motel tax collections over October 2014, new facility construction continues. Multiple projects, including hotels, assisted living/acute care facilities and multi-family properties are under development at both Central Texas Marketplace and neighboring development, Legends Crossing.
Developers note the availability and affordability of real estate, the strong economy, growing population base and market potential as driving influences for investment.
Industrial Expansion
However, development opportunities outside of retail are also abundant in the Waco area. The community continues to attract new industry to the area while growing its existing industrial base. Since 2006, Waco has attracted 30 new industrial businesses to the area and seen more than 55 expansions. This has resulted in more than $1 billion in new capital investment, more than 6,700 new jobs and more than 6 million square feet in new construction and absorbed real estate.
In October, Sherwin-Williams announced it will construct a 600,000-square-foot distribution center in Waco, having outgrown its existing facility. While the company already has an existing presence in the community, the new center represents $39 million in new capital investment and signifies the confidence the company has in Waco and in its ability to provide both a strong, vibrant workforce and the infrastructure necessary to support industry.
The continued growth in the area has reduced what was already a limited inventory of industrial buildings. Waco’s current industrial vacancy rate has decreased to 3.7 percent, down from a five-year high of 7 percent in 2010. 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 over 13,000 employees, including Caterpillar, Coca-Cola, Allergan, Tractor Supply, Alcoa and many more, Texas Central Park is the epicenter of industrial activity in the Waco area.
Downtown Revitalization
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 1,100 new residential units since 2007, with additional capacity for growth.
Looking to further strengthen the downtown, the City of Waco has entered into a memorandum of understanding with Dallas-based Catalyst Urban Development for a potential multi-phase riverfront development project, with a focus on the creation of a waterfront district to incorporate both the north and south banks of the Brazos River. A 120-day feasibility period is underway, with possible construction beginning in the fourth quarter of 2016.
Downtown Waco continues to thrive. While Austin Avenue has been the area to see the most significant transformation, other areas are beginning to see rejuvenation. Magnolia Market, the brainchild of HGTV stars Chip and Joanna Gaines, draws thousands of patrons into downtown and has become a catalyst project for other retail and entertainment venues in the area. With the increasing residential and employment population in the downtown area, office space is another prime opportunity for developers.
As with industrial space, available office space, excluding medical, is experiencing extremely low vacancy rates ranging from 2.5 percent to 0 percent, depending upon the type of space desired.
To say that Waco is growing is an understatement. The development of commercial, retail and residential properties continues to accelerate. Those combined with the growth in population, workforce and quality of life amenities make now the ideal the time for investment in this burgeoning community.
The Greater Waco Chamber of Commerce is the economic development service provider for the Waco region, working for the attraction and retention of industry to the area.
— By Kris Collins, senior vice president of economic development, Greater Waco Chamber of Commerce. This article originally appeared in the January 2016 issue of Texas Real Estate Business.