(June 17, 2015)
In stark contrast to past years when motorists would fly through Waco on I-35 wondering if anything was happening in this town, the dramatic Twin Signature Bridges across the Brazos River now sit majestically with the backdrop of Baylor University’s brand-new, $325 million McLane Stadium. However, over the past 24 months, it has become abundantly clear that the stadium is not the only big thing happening in Waco.
Anyone who has driven the stretch of I-35 that passes through Waco in the past 24 months has undoubtedly noticed quite a bit of new construction, demolition and site clearing for even more commercial construction. Leading the way is the dramatic increase of national restaurants and retailers that have made their presence known to everyone who used to drive right through, but who now stop, eat and shop in Waco.
A primary catalyst of this rise in retail activity has been the release of property along I-35 formerly owned by the Waco Independent School District (ISD).
“We witnessed a surge in demand for retail sites along the I-35 Corridor in 2013,” says Jim Peevey, CCIM a local broker with Central Texas Commercial. “My partner (Andy Sheehy) and I represented Waco ISD in selling three surplus properties on I-35 between University Parks Drive and South Valley Mills Drive. The properties were the Texas Playhouse site, the 3.5-acre Sul Ross campus site, and the 16-plus acre University High School Campus. We received multiple offers from developers out of Dallas and Austin on all three sites. In the end, all three were purchased by the Leon Capital Group.”
Based in Dallas, the Leon Capital Group is a multi-billion dollar asset group that immediately demolished the older school buildings on the Sul Ross and University campuses. A new prototype Chick-fil-A sits across from Baylor on their Sul Ross site.
In addition to the new 52,000-square-foot Gander Mountain that opened right before Christmas on the University campus site, construction is almost complete on a 4,620-square-foot building to house a new Starbucks and PotBelly Sandwich Shop, as well as an 8,700-square-foot Bubba’s 33, soon to be followed by a 107-room Hilton Home-2-Suites next to Gander and two other as-yet-undisclosed restaurants and one fashion retailer.
“We have found Waco to be a vibrant market and a place that encourages development,” says Fernando DeLeon, founder and CEO of the Leon Capital Group. “Throughout numerous developments over the past several years, the city has always welcomed our investment in the community, considered us a partner more so than a simple market participant and has repeatedly gone the extra mile to see that our projects were given every chance to be successful. Waco’s economy has a depth and breadth that results in consistently strong returns for our retail partners, and we look forward to future projects in the city.”
Prior to the sale of these three campuses, a fourth was sold to H-E-B Food Stores as part of a multi-property assemblage brokered by Mike Meadows. The assemblage allowed the development of H-E-B’s flagship H-E-B plus store at the intersection of I-35 and Valley Mills Drive. H-E-B plus stores sell more than groceries, and focus on outfitting families with what they need for Texas lifestyles including brisket smokers, electronics, toys, housewares party supplies and apparel.
“Waco’s position in Texas makes it a regional draw for industrial and retail commerce,” says Kris Collins, senior vice president of economic development for the Greater Waco Chamber. “Improvements to I-35 have continued to highlight the growth through the Waco region, including the new signature bridges crossing the Brazos River at McLane Stadium. With the passage of Proposition 1, the Waco region will receive $61 million in state funding for new road infrastructure projects.”
Predating even the H-E-B plus was the development of Phase I of Central Texas Marketplace (CTM) at the I-35 and Loop 340 interchange, and the Hillcrest/Scott & White Hospital campus in Legends Crossing across Loop 340.
When Robert McCollum first brokered the CTM land sale to D&D Financial Partners of Dallas and Atlanta’s AIG Baker Shopping Center Properties in 2004, some local sentiment about the proposed $100 million development was that these “outsiders” were paying too much for farmland, and that no one would shop there.
That sentiment has since been proven dead wrong! Not only has the first phase of CTM flourished, but a new round of construction kicked off in 2014 with the opening of the new Cabela’s Outpost. Now, Collett Development has almost completed Phase II of CTM, which will include over 150,000 square feet of new retail between Cabela’s and Office Depot that includes Havertys (35,000 square feet), Jo-Ann Fabric and Craft Stores (25,000 square feet), Cost Plus World Market (18,000 square feet), Bed Bath & Beyond (25,000 square feet), Five Below (8,000 square feet), Cavender’s Boot City (20,500 square feet), and DSW (12,000 square feet).
Twin Peaks recently opened in CTM but other restaurants coming to I-35 that haven’t started construction include Saltgrass Steakhouse, Heitmiller Steakhouse, Bob’s Burger Barn, Fuego and Freddy’s Steakburgers. McCollum’s most recent CTM sale was to Emerald Investments, which is constructing a senior lifestyle community surrounded by spec street retail at the Bagby entrance, including a new Kirkland’s, which will complete the third and final phase of Central Texas Marketplace.
As if to punctuate this steady stream of new Waco-area retail development, WalMart has acquired a 21-acre site from Commerce Park at the intersection of I-35 and Alliance Parkway in Hewitt for a new 160,000-square-foot WalMart SuperCenter, which is scheduled for delivery in 2017.
“With nearly 100,000 vehicles passing through here daily, development along I-35 is important to how people perceive Waco,” says Clint Peters, director of planning for the City of Waco. “Recent developments have vastly improved the image of Waco and are changing people’s perception of our city.”
No longer do travelers “flash back” and forth past Waco on I-35. They now stop, shop and order some rolls because Waco retail real estate is on fire!
Christopher Gutierrez, CCIM, is Broker/Owner of Texas Commercial & Industrial Real Estate Services, a Certified Commercial Investment Member and a member of the International Council of Shopping Centers. He previously served on the Waco Planning Commission for 12 years, and his first meeting with the commission was to hear the zoning request for a conceptual development called “Central Texas Marketplace”.
This article originally appeared in Texas Real Estate Business, April 2015. © 2015 France Media, Inc. www.rebusinessonline.com.