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The Rio Grande Valley
Where much of the United States has suffered an economic downturn, the McAllen area and other border communities continue to grow in terms of job creation, population, and other economic indicators. The retail sector of the economic is sustained by the local population and spurred by Mexican shoppers and “Winter Texans”.
In the office market, the driving forces in the creation of new space have been medical facilities, call centers, and government. Rio Grande Regional Hospital recently added a five-story patient tower. Driscoll Children's Hospital, Texas A& M School for Rural Public Health and South Texas Community College has completed construction of new facilities. Over 350,000 square feet of medical office space is either currently under construction or in the final planning stages. Call center such as Converges, Hotels.com and T-Mobile have continued to expand.
In the industrial market, over 2.6 million square feet of Class A building were constructed since 1998 on both build to suit and speculative basis. Symbol Technologies, Frito-Lays, Jabal Global Services, Black and Decker, Sharp Electronics, RC Coils and others have established new operations or expanded. Because of the continued growth and relocation of manufacturing companies into Reynosa, including a new 300,000 square foot Maytag production facility, the McAllen-Mission market can expect continued growth from suppliers locating on the US-side of the border. An additional 750,000 square feet of industrial space is slated to completed construction in 2004.
The Retail market experienced robust growth in McAllen–Mission area as well. New retailers into the market including Barnes & Noble, Bed Bath & Beyond, an additional Targets store in North McAllen, a Michael's expansion, Shoe Carnival, an Academy Sporting Goods expansion and more. Simon Properties' La Plaza Mall, with anchors such as Foley's, Dillard's, JC Penny's and Sears has continued to post higher than average per square foot sales. The growing population and increased earnings bode well for the retail market in this area. And Starbuck are popping up all over.
McALLEN / MISSION
AT-A-GLANCE (Rent/space foot/year)
Low High Effective Avg. Vacancy
DOWNTOWN OFFICE Class A $ 14.00 $20.00 $16.00 3.0%
Class B $ 9.60 $12.00 $10.00 10.0%
SUBURBAN OFFICE New Construction $15.00 $20.00 $16.00 10.0%
Class A $12.00 $15.00 $14.00 3.0%
Class B $9.60 $12.00 $10.00 10.0%
INDUSTRIAL Bulk warehouse $3.25 $5.25 $4.00 <5.0%
Manufacturing $4.50 $6.00 $5.00 <3.0%
Flex $4.50 $12.00 $6.00 <5.0%
RETAIL Downtown $6.00 $12.00 $6.00 20.0%
Neighborhood Service Center $5.00 $18.00 $7.00 10.0%
Community Power Center $7.50 $18.00 $14.50 0.0%
Regional Malls $25.00 $50.00 $35.00 2.0%
DEVELOPMENT LAND Low High (Price/Acre)
In office park $87,120 $435,600
In Industrial park $35,000 $87,120
Office/Industrial-Non-park $35,000 $87,120
Retail/Commercial $174,240 $435,600
Residential $10,890 $63,340
MARKET
OVERVIEW BROWNSVILLE HARLINGEN MSA Located in the Deep South Texas along the mouth of the Rio Grande River, The Brownsville/Harlingen MSA is among the fastest –growing areas in the United States with a 28.9% growth rate from 1990 to 2000. International trade due to NAFTA has fueled this growth.
Forbes/Milken's annual survey of the best places to do business ranked the Cameron County area 9th out of 200 metro areas in the Untied States in 2000. With low a low cost of living index of about this area continues to lead South Texas in most construction activity indices.
The Office market here continues to be dominated by the medical industry. The University of Texas opened the doors to a new $30 million state-of- the- art Regional Academic Health Center in July 2002. The 130-bed Harlingen Medical Center opened in October 2002, while Su Clinica with over 260 employees opened in September 2002. Other medical-related facilities are scheduled for completion in 2003. Adding to this growth, The University of Texas –Brownsville, broke ground on a new Business facility in November 2002 and completed a $23.8 million Science and Technology Building. The outlook for spin-offs from this institutional activity is promising.
Call center including RMH Teleservices, West Teleservices, and Advances Call Center Technologies have contribute to continued growth in the office market.
The Industrial market slowed in 2002, but is expected to rebound in 2003. Many Tier I and II suppliers such as Mid-Valley Truss & Door Co. and ITD Precision (metal stamping) continued to grow due to expansions and relocations in the manufacturing industry to border communities in Mexico.
The continued progress of highway construction projects leading to establishment of a NAFTA superhighway (Interstate 69) from Michigan to South Texas will promote this area as an ideal choice for manufactures and logistics companies taking advantage of the low-cost labor marketers on both sides of the border . Construction of loop connecting adjacent to UT-Brownsville and the proposed office /retail development known as River Centre is schedule to begin in January 2003.
The population explosion in South Texas continues to drive the retail market. Sunrise Mall's expansion and the development of Sunrise Commons (power center) have added over 200,000 square feet of new retail over the past year. Mexican consumers flocked to these shopping centers also. Other centers in this market include Paseo real, La Placita and Park Plaza. Paseo Real is located in north Brownsville's fast-growing area. The last few years have seen a 10% annual growth in retail sales in the market. As job growth from the government and medical sectors of the economy reaches new levels, the retail market will continue to benefit from the increase in consumer spending not seen in the most other markets.
HARLINGEN /
BROWNSVILLE AT-A-GLANCE (Rent/space foot/year)
Low High Effective Avg Vacancy
DOWNTOWN OFFICEClass A $ 12.00 $13.80 $12.90 10.0%
Class B $3.60 $10.20 $7.00 60.0%
SUBURBAN OFFICE New Construction $12.00 $20.00 $15.00 5.0%
Class A $12.00 $18.00 $13.20 10.0%
Class B $9.60 $12.00 $10.00 20.0%
INDUSTRIAL Bulk warehouse $3.00 $3.60 $3.30 5.0%
Manufacturing $3.60 $6.00 $4.00 15.0%
Flex $4.80 $12.00 $6.00 5.0%
RETAILDowntown $4.00 $5.40 $4.70 60.0%
Neighborhood Service Center $10.20 $16.40 $13.20 10.0%
Community Power Center $7.00 $18.00 $17.40 10.0%
Regional Malls $15.40 $21.00 $17.40 5.0%
DEVELOPMENT LAND Low High (Price/Acre)
In office park $26,136 $217,800
In Industrial park $43,560 $87,800
Office/Industrial-Non-park $10,890 $130,000
Retail/Commercial $174,240 $435,600
Residential $10,890 $63,340
Source: NAI Rio Grande Valley
DISCLOSURE: This information contained herein was obtained from sources believed reliable. However, REALTORRGV.COM makes no guarantees, warranties, or representations as to the completeness or accuracy thereof. The presentations of properties are submitted subject to errors, omission, change of price, conditions, or withdrawal without notice. Lucy Sisniega is a Licensed Real Estate agent in the State of Texas.