Amarillo has continued on the path of steady growth with a strong unemployment rate of 2.7 percent. Along with its sturdy economy, Amarillo’s commercial market has followed a path of consistent advancement, but there are clouds on the horizon and hints of a stall are visible.
Our core market indicators are showing cracks. There are fewer jobs now than there were a year ago. Commodities have been flat at best. Oil prices have experienced declines in excess of 10 percent from this time last year, with natural gas prices dropping nearly 25 percent from a year ago.
Despite some early spells of ample moisture, recent heat and low rain totals have hurt Panhandle farmers and ranchers. The uncertainty regarding tariffs on these natural resources has created anxiety as well.
Ben Whittenburg, Gaut Whittenburg Emerson CRE
For the city’s industrial and commercial real estate sectors, the collective message of these trends is that the long stretch of economic expansion that has propped up the market, may be in the rearview mirror.
New Developments
Some new land purchases with plans for industrial developments should help the tax base. Caviness Beef Packers recently purchased 100 acres with plans to build a new facility.
In addition, the Amarillo Economic Development Corp. purchased 190 acres at Loop 335 and South Georgia with intentions to duplicate its success at the CenterPort Business Park.
We consistently get inquiries regarding available industrial space in the area, but have had a difficult time producing the right space due to the lack of large, clear span product on the market.
Most properties have lower ceiling heights and don’t meet the needs of today’s efficiency-driven warehouse tenant. That signals a good time for a developer to enter the market, produce a large-scale warehouse development and meet the demand that is in place.
Downtown Amarillo has been a shining star as of late. With the initial development of the Amarillo Globe-News Center for the Performing Arts and the transformation of the historic Fisk Building into the Courtyard by Marriott, downtown has seen a revival of sorts.
Recent projects include The Embassy Suites conference center and hotel, Xcel Energy’s new 119,000-square-foot headquarters, West Texas A&M’s downtown campus and the jewel, Hodgetown. Hodgetown is a 6,631-seat, multi-purpose event center and home of the Amarillo Sod Poodles, a AA baseball franchise that has been nothing but a success. Redevelopment plans call for additional downtown housing and retail, but thus far, that has taken longer to materialize
Retail, Medical Impacts
The State Legislature in June designated funding for a Texas Tech Veterinary School located off Coulter in northwest Amarillo. It will be only the second veterinary medicine school in Texas besides that of Texas A&M. It took a tremendous amount of public and private buy-in, but the school will soon be a reality. The growth of Tech’s campus along with the Harrington Regional Medical Center will propel the medical community, but will also assist in increased demand for hospitality and general retail in the area.
Southwest Amarillo continues its expansion in both the single-family and retail sectors. Several new retail centers have been built over the last several years with limited success. The construction of these new projects and residual population growth should be a key demand drivers for industrial space in Amarillo.
Southeast Amarillo lacks a true identity, but that might be changing. While single-family development has grown over the last several years, retail has failed to keep up. There are sporadic single- and double-tenant retail developments that have popped up, but no centers of significant size. As the rooftops increase, the demand for retail will justify larger retail projects.
A Changing Landscape
Amarillo’s commercial real estate market remains a story of corridors. The northeast corridor is predominantly populated with industrial properties, the northwest with multifamily and medical, the southwest with retail and the southeast with sporadic development. Downtown Amarillo, has recently seen a resurgence of hospitality, restaurant and bar uses, but housing and retail are lagging.
Amarillo’s northeast corridor has been dominated by industrial developments, but efforts to increase the retail presence are ongoing. Birmingham’s Graham & Co. recently announced a 70,000-square-foot pallet distribution and service center in the Amarillo Economic Development Corp.’s CenterPort Business Park. The facility will continue a streak of success in attracting industrial clients to the workforce.
Graham & Co. is building a 70,000-square-foot distribution center in Amarillo for pallet provider CHEP, the Alabama-based developer’s first project in Texas.
While the east portion of Interstate 40 does have its fair share of hotels and truck stops, general industrial zoning and demographics have contributed to limited retail development in this area.
Recently, a Tax Increment Reinvestment Zone No. 2 (TIRZ No. 2) has been formed to give retail along I-40 a tailwind. It is too early to tell if this effort will succeed, but high traffic counts and cheap land will help get the effort moving forward.
Will Amarillo’s path of steady growth continue? It remains to be seen. Right now, a flat market is a good market. People of the Panhandle tend to have a conservative, risk-averse nature.
While Amarillo may miss out on some of the good times, we are the envy of the rest during times of struggle. With our monitored growth, we rarely see times of drastic crashes, but the national economy could drag us down with it. With the recent announcement of a yield curve inversion and continued tariffs, we may be swimming against the tide.
— By Ben Whittenburg, owner/agent, Gaut Whittenburg Emerson CRE. This article first appeared in the September 2019 issue of Texas Real Estate Business magazine.