jennifer s. cowley

Jennifer S. CowleyAssistant Research Scientist

Texas A&M University

May 2001

© 2001, Real Estate Center. All rights reserved.

Real Estate Market Overview

WacoReal Estate Market Overview

Waco


Waco

Population

Employment

Job Market

Major IndustriesBusiness Climate

Education

Transportation and Infrastructure Issues

Urban Growth PatternsGrowth Areas Map

Public FacilitiesHousing

Multifamily

Manufactured Housing

Seniors HousingRetail Market

Office Market

Industrial MarketConclusion

Contents

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Waco

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SH 6

I 35CR 3051

US 77B

US 77US 84

SH 6

SH 484

US 84SH 396

Waco

Woodway

Robinson

Hewitt

Lacy-Lakeview

Bellmead

Jennifer S. CowleyAssistant Research Scientist


WacoReal Estate Market Overview

Waco

Land Area of Waco MSA1,061 square miles

Population Density (2000)201 people per square mile

Area Cities and TownsBellmeadBruceville

China SpringCrawford

EddyElm MottGholson

CountyMcLennan

Waco is located on the I-35corridor between Dallas andAustin. The city was

founded in 1849 by 21 settlers whowanted to locate along the Brazos

River. In 1870, a 474-foot suspensionbridge was built over the Brazos River.The toll bridge was open to cattle andfoot traffic and was the longest single-span bridge in the world at that time.

Waco is home to Texas’ largest urbanlake, with 60 miles of shoreline. To-day, the Waco MSA is a growing areawith a population of more than200,000.

RieselRobinson

Valley MillsWacoWest

Woodway

HewittLacy-Lakeview

LorenaLeroyMart

McGregorMoody

2

Kelly Air Force Base, San AntonioPOPULATION

Waco MSA Population

Year Population

1990 189,562

1991 191,064

1992 191,924

1993 193,719

1994 197,326

1995 198,780

1996 201,104

1997 202,385

1998 203,214

1999 204,244

2000 213,517

Source: U.S. Census Bureau, May 2001

Area Cities With 10,000 or More Residents

Growth 1990–2000City 2000 Population (in percent)

Waco 113,726 9.4Hewitt 11,085 23.8

Source: U.S. Census Bureau

The Waco Metropolitan Statisti-cal Area (MSA) has grownsteadily over the past ten years,

increasing in population by 9.4 per-cent between 1990 and 2000. The

growth rate has been higher in thecounty and smaller cities than in theCity of Waco.

The Texas Water DevelopmentBoard predicts a 3 percent per year

growth rate over the next 20 years. TheTexas State Data Center predicts aslower growth rate of 1 percent peryear over the next 20 years.

3

Texas Metropolitan Area Population Change, 1990–2000 (in percent)

McAllen-Edinburg-Mission 48.5 Galveston-Texas City 15.1Austin-San Marcos 48.2 Tyler 15.5Laredo 44.9 El Paso 14.9Dallas 31.5 Corpus Christi 14.3Brownsville-Harlingen-San Benito 28.9 Victoria 13.1Brazoria County 26.1 Waco 12.9Houston 25.8 Texarkana 9.4Fort Worth-Arlington 25.1 Lubbock 9.0Bryan-College Station 25.1 Wichita Falls 7.8Texas 22.8 Longview-Marshall 7.7Killeen-Temple 22.6 Beaumont-Port Arthur 6.6San Antonio 20.2 Abilene 5.8Sherman-Denison 16.4 San Angelo 5.6Amarillo 16.2 Odessa-Midland 5.1


Waco MSA Projected Population

Texas State Texas WaterYear Data Center Development Board

2005 208,179 —

2010 213,991 261,923

2015 217,083 —

2020 219,218 282,583

Sources: Texas State Data Center and Texas Water Development Board

Projected Population Growth, 2000–2020(in percent)

Source: Texas State Data Center

10.3

40.2

0

10

20

30

40

50

Waco MSA Texas

4

Household Composition

Waco MSA Texas

Median household size (1990) 2.3 2.7

Population younger than 18(1999, in percent) 26.3 28.5

Population 65 and older(1999, in percent) 12.9 10.1


Ethnic Distribution(in percent)

Waco MSA TexasEthnicity 1990 2000 1990 2000

White 71.1 64.6 60.8 52.4

Hispanic 12.5 17.9 25.3 32.0

Black 15.4 15.0 11.7 11.3

Asian 0.7 1.1 0.3 2.7

American Indian 0.2 0.3 1.8 0.3

Other 0.1 0.1 0.1 0.2

Two or more races* _ 1.0 _ 1.1

*For the 2000 Census, the Census Bureau changed the “race” options, allowing people toreport their race as “other” or as two or more races.


The Waco area has a largerpopulation age 65 and olderthan the state as a whole. The

MSA is following a statewide trend ofincreasing ethnic diversity. The U.S.Bureau of Economic Analysis reported

the Waco MSA had average per capitapersonal income of $21,826 in 1999.The state average was $26,834.

5

Waco MSA Unemployment Rate(in percent)

Source: U.S. Bureau of Labor Statistics

Source: U.S. Bureau of Labor Statistics

EMPLOYMENT

Waco MSA Employment

80,000

82,000

84,000

86,000

88,000

90,000

92,000

94,000

96,000

98,000

100,000

1990

1991

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6

Employment Growth by Industry Waco MSA Texas

Employment growth, 2000 (in percent) 1.2 3.2Unemployment rate (in percent) 3.2 4.2New jobs in 2000 1,200 288,900Employment growth by sector (in percent)

Services 2.3 4.7 Trade 1.3 3.1 Manufacturing -3.6 0.1 Mining n/a 2.3 Finance, insurance and real estate 3.1 1.3 Construction 1.9 6.2 Government 4.0 1.7 Transportation, communications and public utilities 2.3 5.1

Bergstrom Air Force Base, Austin

Top Ten Employers Top Ten Private Employers

Sources: Waco Chamber of Commerce and individual companies' estimates, 2001

Waco Independent School DistrictEducation2,448 employees

Hillcrest Baptist Medical CenterHealth care1,967 employees

RaytheonAircraft1,900 employees

Baylor UniversityEducation1,700 employees

Providence Health SystemsHealth care1,600 employees

City of WacoGovernment1,500 employees

H-E-B GroceryGrocery1,500 employees

Cargill Foods, Inc.Poultry processing plant1,250 employees

Fleetwood Homes of TexasManufactured home production1,032 employees

Wal-MartRetail950 employees

Hillcrest Baptist Medical CenterHealth care1,967 employees

RaytheonAircraft1,900 employees

Baylor UniversityEducation1,700 employees

Providence Health SystemsHealth care1,600 employees

H-E-B GroceryGrocery1,500 employees

Cargill Foods, Inc.Poultry processing plant1,250 employees

Fleetwood Homes of TexasManufactured home production1,032 employees

Wal-MartRetail950 employees

PMSI LPInsurance950 employees

M&M MarsConfectionery plant850 employees

Source: Texas Workforce Commission

7

Texas Metropolitan Area Employment Change, 1990–2000(in percent)

Austin-San Marcos 58.8 El Paso 15.4Laredo 40.3 Waco 14.3McAllen-Edinburg-Mission 35.8 Lubbock 14.0Dallas 30.4 Sherman-Denison 12.5Brownsville-Harlingen-San Benito 30.1 Longview-Marshall 12.2Bryan-College Station 29.2 Abilene 11.4Killeen-Temple 28.7 San Angelo 10.7San Antonio 28.6 Corpus Christi 10.3Fort Worth-Arlington 23.7 Galveston-Texas City 8.2Texas 23.3 Wichita Falls 7.8Tyler 22.9 Odessa-Midland 6.5Victoria 22.4 Texarkana 4.5Houston 22.1 Beaumont-Port Arthur 3.5Amarillo 18.6 Brazoria County 2.3

Source: U.S. Bureau of Labor Statistics, February 2001

Health care industries and edu-cational institutions are majoremployers in McLennan

County. Waco is the headquarters ofRaytheon’s aircraft integration divi-sion. Manufactured homes and theircomponents also are important in the

MSA. Employment in McLennanCounty nonagricultural employmentrose 1.2 percent in 2000 to 101,600persons, according to the TexasWorkforce Commission. The U.S. Bu-reau of Labor Statistics estimates civil-ian employment for 2000 at 98,700.

Average civilian unemployment in2000 was 3.3 percent, according to theU.S. Bureau of Labor Statistics. Aver-age nonagricultural unemploymentwas and 3.2 percent according to theTexas Workforce Commission.

JOB MARKET

C aterpillar opened a plant inWaco during the first quarterof 2001 and hired 100 people.

Pilgram’s Pride added two shifts and380 jobs to its Waco plant in May

2000. Birch Telecom expanded, add-ing eight employees in Waco.

Fleetwood Homes laid off 121 at theend of 2000 because of an oversupplyof housing. Patriot Homes laid off 30

people during 2000. Time Condor, amanufacturer of self-propelled lifts,laid off 27 at the end of 2000.

8

MAJOR INDUSTRIES

The services sector is the largestindustry segment in the WacoMSA, comprising 30 percent of

the area’s nonagricultural jobs. Tradeaccounts for 22 percent, and manufac-turing accounts for 15 percent of theeconomy. Trade and manufacturingthrive in Waco because of the city’sproximity to major metropolitan areasas well as the city’s location on I-35.

The area’s largest job gains in 2000came in the services sector, which

added 700 jobs. The trade sectorgained 300 jobs and transportation,communication and public utilitiesadded 100. Government gained 600jobs during 2000.

The manufacturing sector lost 600jobs during 2000, primarily the resultof sluggish sales in the manufacturedhome industry.

A 1999 study conducted by theMilken Institute ranked Waco 23rd

BUSINESS CLIMATE

Tax Rates, 2000

McLennan County Tax Rate perTaxing Entity $100 Valuation

City of Waco $0.72Waco ISD 1.58McLennan Community College 0.12McLennan County 0.45Total $2.87

Source: McLennan County Appraisal District

among the fastest growing high-techU.S. communities.

The Texas Agricultural ExtensionService projects McLennan County tohave agricultural receipts totaling$172.4 million in 2001, $5 millionmore than in 2000. Poultry has histori-cally accounted for 55 percent of thesereceipts. Beef cattle and nursery cropsaccount for 14 and 8 percent, respec-tively.

Waco MSA Retail Sales

Year Total Sales Sales per Capita

1990 $1,407,653,692 $7,4261991 1,450,903,212 7,5941992 1,554,891,978 8,1021993 1,686,951,875 8,7081994 1,815,046,489 9,1981995 2,030,098,684 10,2131996 2,080,214,394 10,3441997 2,118,625,851 10,4681998 2,186,699,893 10,7611999 2,309,948,822 11,3102000* 1,781,181,429

State Average 1999 $12,332

*Through third quarter 2000Source: Texas Comptroller’s Office

9

Retail sales have steadily increased in the Waco MSA.Waco ranked eighth out of the

27 Texas MSAs in Sprint’s 1999 MostProductive City report. Criteria in-cluded employment rates, growthrates, real per capita income, educa-tion, output per worker, business sec-tor diversity, per capita income, earn-ings growth rate and air transportationaccessibility.

Waco has a 13 percent hotel-moteltax rate. According to the Texas De-partment of Economic Development,in 1999 Waco raised $1.4 million inhotel-motel tax revenue. Both Wacoand Hewitt have an 8.25 percent salestax.

The Waco-McLennan County Eco-nomic Development Corporationmakes recommendations on how the

city and county should use their eco-nomic development fund to attractnew businesses. Two primary factorsconsidered in the distribution of fundsare the number of jobs created that willpay more than $9 per hour and theamount of capital invested in plant andequipment. Incentives are dispersed inthe form of cash, job training or re-duced land costs. The Waco CityCouncil can approve tax abatementsfor businesses that contribute to eco-nomic growth.

Firms hiring residents from the WacoEnterprise Community may be eligibleto receive incentives through the WorkOpportunity Tax Credit program. Themaximum tax credit is $2,100 per em-ployee per year.

Minimarkets are specified areas inwhich commercial growth is promoted

through incentives. In Waco, such in-centives exist for firms interested in lo-cating in the regions of LaSalle Driveand South 11th Street in south Waco,Elm Avenue in east Waco and North25th Street in north Waco. Waco alsohas a freeport tax exemption program.

Tourism is a thriving Waco industry,with many attractions luring visitors tothe city. Bird watching, cultural heri-tage and winter travel entice the mostvisitors to the area. Waco has art muse-ums, historic homes, the Dr. PepperMuseum, the Texas Sports Hall ofFame and the Texas Ranger Hall ofFame and Museum.

Lake Waco is another popular touristdraw. The 7,270-acre lake offers swim-ming, boating, fishing and camping.

EDUCATION

Fall 2005 2010School 2000 (estimated) (estimated)

Baylor University 13,719 n/a n/aMcLennan Community College 5,611 5,848 5,922Texas State Technical College 3,836 4,244 4,333

Sources: Educational institutions and the Texas Higher Education Coordinating Board

Educational Level, Persons Age 25 and Older(in percent)

Level of Education Waco MSA Texas

High school graduate 27.8 25.6Some college, no degree 20.5 21.1Associate's degree 6.7 5.2Bachelor’s degree 10.8 13.9Graduate or professional degree 5.8 6.5


Local College and University Enrollment

10

TRANSPORTATION AND INFRASTRUCTURE ISSUES

Waco is located on I-35, theNAFTA Superhighway. U.S.Highways 77 and 84 run

through McLennan County as doesTexas Highway 6. A 1999 trade corri-dor study shows the need for at leasteight lanes of traffic on the interstatethrough Waco and possibly ten by theyear 2025. A $17 million project toadd two lanes between Craven Av-enue in Lacy-Lakeview and Business77 in Elm Mott began in late 2000.Highway 6 is to be turned into a four-lane divided highway between Wacoand Bryan. A bypass is under construc-tion in Riesel to help serve this pur-pose.

American Eagle and Continental Ex-press provide service to Dallas andHouston, respectively, from the WacoRegional Airport. During 2001, the air-port is extending a ramp area for air-plane parking and is working on a newmaster plan.

Waco receives water from LakeWaco, which should provide a suffi-cient supply for the next 50 years, ac-cording to the state water plan. A $5.9million project, completed in 2000,raised Lake Waco’s dam by 4.6 feetand added a lighted hike-and-biketrail, road improvements and improve-ments to Speegleville Park. Wacoplans to raise the level of Lake Waco to

ensure the city’s water supply over thenext 50 years. The city is trying to pur-chase 100 acres for habitat mitigationthat would result from the raising of thelake. A second project, costing $25 to$30 million and currently in the plan-ning stage, will expand Lake Wacoand increase the city’s water supply tolast 100 years.

A new $1.54 million water towernear Loop 340 and Highway 84, willreplace the old tower in front of theHeart O’ Texas Coliseum in southwestWaco. The tower, which should becompleted in 2001, will have doublethe capacity of the old tower.

I nstitutions of higher education inMcLennan County include BaylorUniversity, Texas State Technical

College (TSTC) and McLennan Com-munity College (MCC). TSTC is theonly state-supported technical collegeand has been offering courses since1966. Founded in 1845 and now thelargest Baptist university in the world,Baylor is undergoing several construc-tion projects.

New softball and baseball stadiums,part of the $12.5 million athletic com-plex overlooking the Brazos River,were completed in February 2001. Asoccer field and tennis courts also areincluded. The $28 million Sheila and

Walter Umphrey Law Center is to becompleted in fall 2001. The $17 mil-lion Truett Seminary campus brokeground in February 2000. The 64,000-square-foot building is located on theBaylor campus.

Baylor’s golf team will be getting anew golf course. Ground broke on theBear Ridge golf course in September2000. The $7.5 million course is lo-cated at Highway 84 near SpeeglevilleRoad.

Baylor University is raising moneyfor an $18.1 million natural scienceand cultural history museum. The Sueand Frank Mayborn Natural Scienceand Cultural History Museum will be

built in two phases. The first phase willinclude a 90,000-square-foot complexlocated at University Parks Drive andInterstate 35 and broke ground in Janu-ary 2001.

In February 2001, ground broke onthe Stacy Riddle Forum. The $5.5 mil-lion Panhellenic building is located atNinth Street and Baylor Avenue. Thetwo-story building contains 51,000square feet of space.

The School of Engineering and Com-puter Science is planning to expandthe Rogers Engineering and ComputerScience Building. Fund raising for thisproject is underway.

Waco Airline Boardings

1997 1998 1999 2000

Waco Regional Airport 61,395 59,034 62,786 62,119

Sources: Waco Regional Airport

11

Growth Areas

Source: Real Estate Center at Texas A&M University

Waco, TexasCensus PlaceWater AreaHighwayInterstate Highway

SH 6

I 35

CR 3051

US 77B

US 77US 84

SH 6 SH 484

US 84SH 396

CommercialIndustrial

Retail

Multifamily

Industrial

Residential

Residential

URBAN GROWTH PATTERNS

The map shows Waco’s majorgrowth corridors. The majorityof residential growth has been

occurring south of Waco, according tothe Waco Planning Department. TheHighway 84 corridor has seen a lot ofgrowth through Woodway to theMcGregor Airport. Growth has alsobeen occurring on FM 1695 andHewitt Drive into Hewitt. Another resi-dential growth area is in Robinson onFM 3148 west of Highway 77. Apart-ment growth has been occurringdowntown and near Baylor University.

The Waco Planning Department re-ports retail growth to be most prevalenton Hewitt Drive and on South FranklinAvenue between Highway 6 and Val-ley Mills Drive. To a lesser extent, theLoop 340 and I-35 intersection, northof town, has also seen development.Industrial growth continues in theTexas Central Industrial Park locatedsouthwest of the Highway 6 and I-35intersection.

Downtown Waco, Inc. is in chargeof marketing land within the BrazosRiver corridor for future commercialdevelopment. The 8.5-square-milearea between Lake Brazos Dam andLake Shore Drive includes the BosqueRiver. This area is expected to be a fu-ture growth corridor. DowntownWaco, Inc. is proposing developmentand upkeep regulations to ensure thebeauty of the area.

12

Waco MSA Single-family Permits


HOUSING

PUBLIC FACILITIES

The Cameron Park Zoo is ex-panding. The $9.5 millionproject is expected to be com-

pleted in 2002. The natural habitatzoo’s population will double and anexhibit called Brazos River Countrywill be built.

The City of Waco is building a $7.5million regional tennis and aquaticscomplex on Lake Shore Drive alongthe Bosque River. Construction on thetennis facility began at the end of2000. The aquatics center constructionbegan in early 2001.

Waco received $2.5 million from theTexas Transportation Commission tobuild a $3.2 million, two-mile lighted

riverwalk on the east side of the BrazosRiver. Heritage Square, a $2.4 millionproject initiated by Keep Waco Beauti-ful, is an outdoor plaza across fromcity hall that was completed in 2000.

The Heart O’ Texas Coliseum andFairgrounds is undergoing phase twoof its expansion, which involves re-placing the red horse and livestockbarns with a new equine center andlivestock exhibition hall. The new fa-cilities will include 450 horse stalls,900 slots for cattle and an air-condi-tioned arena. The livestock barn hasalready been demolished, and the newequine center is scheduled for comple-tion in summer 2001. The Heart O'

Texas Fair and Rodeo has representedapproximately 69 percent of the facili-ties’ operating budget in past years.

A middle school is being planned forsouth Waco. The $7.5 million projectis located at South 15th Street on theCotton Palace Park. The school is ex-pected to be completed for fall 2002.

Waco High School is undergoing thesecond phase of an exterior renova-tion. The renovation includes rede-signing the school’s main entrance.

Waco ISD occupied its new $13 mil-lion stadium during fall 2000. The sta-dium has a capacity of 10,000.

0

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Average Sales Price of Single-family Home,Waco Area


$0

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Single-family Home Sales Volume, Waco Area


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1998 1999 2000

I n 2000, 523 single-family homeswere permitted; in 1999, 494single-family home permits were

issued in the metropolitan area. Theaverage value of a new home was$129,200 in 2000 compared to$108,900 in 1999. In first quarter 2001,174 new single-family permits were is-sued.

In 2000, 1,040 homes were reportedsold through the Waco MLS. This isdown 40 percent from 1999 when1,733 homes were sold. The averagesales price declined from $97,000 in1999 to $94,100 in 2000.

Planning personnel at the City ofWaco identified Sun West Village,Meadowland Estates, Stonecreek

Ranch and Hidden Valley Estates assubdivisions with construction activ-ity.

The Villages at Twin Rivers is a newsubdivision adjacent to the $7.5 mil-lion Bear Ridge Golf Course whichbroke ground in September 2000. A500-lot subdivision at the golf coursewill have homes priced from $250,000

14

MULTIFAMILY

Waco MSA Multifamily Building Permits(in units)


to $1 million. The project is locatedbetween South Bosque Bridge andSpeegleville Road west of Highway 84.The first phase includes 130 lots. Salesbegan in winter 2000.

The Waco City Council is giving va-cant, city-owned land to developers ata nominal cost and waiving permittingfees in exchange for development of

attractive, affordable housing. The citydonated 39 lots to a local developer tobuild 34 affordable homes beginningin January 2000; the homes range inprice from $59,500 to $77,700. Thelots are located in northeast Waco inthe Applegrove subdivision. The city

will spend $250,000, primarily fromfederal Community DevelopmentBlock Grant funds, on water, sewer,streets and sidewalks for the neighbor-hood.

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Waco Apartment Statistics

January 2000 January 2001

Texas Metro Texas MetroWaco Average Waco Average

Average rent per square foot $0.61 $0.69 $0.63 $0.75Average rent for units built since 1990 $0.73 $0.95 $0.45 $0.97Average occupancy (in percent) 96.0 94.7 96.8 95.6Average occupancy for units built between 1990-2000 (in percent) 97.9 92.3 85.4 95.5

Source: Apartment MarketData Research

A partments in Waco rent forlessthan the state average rentalrates. Occupancy rates in

Waco increased during 2000. Wacohas a higher occupancy rate than thestate as a whole. However, occupancyrates for newer units are low. In 2000,62 units were permitted, up from 47 in1999. In January 2001, a 126-unitapartment complex was permitted. In

first quarter 2001, 171 new multifamilyunits were permitted.

An abandoned apartment complexnear McLennan Community College isreceiving a $12 million renovation.Overlook Station will have 266 unitswhen completed at the end of 2001.

Upscale loft apartments are plannedin the L.L. Sams Building at La SalleAvenue and University Parks Drive.

The 126 units will be available duringsummer 2002.

Parkside Village Apartments will un-dergo a $1.8 million renovation. Reno-vations on the 200-unit complex lo-cated at North Ninth Street areexpected to be completed during sum-mer 2001.

MANUFACTURED HOUSING

Waco MSA Manufactured Home Sales

Proportion of NewManufactured Single-family HomesHomes Sold (in percent)

1997 259 41.11998 341 46.31999 343 41.02000* 202 35.4

* Through third quarter 2000

Source: Texas Manufactured Housing Association

During 1999, manufacturedhouses represented 41 per-cent of all new single-family

housing sold in Waco. Through third

quarter 2000, the proportion of newsingle-family manufactured homeswas less than the previous year.

16

Hotel Occupancy and Rental Rates

1999 2000Waco Texas Waco Texas

Occupancy rate (in percent) 61.5 63.7 66.7 67.2Average daily rental rate $53.42 $85.11 $56.09 $86.75

Source: PKF Consulting

2000 Retail Property Statistics

Neighborhood andCommunity Regional Shopping

Shopping Centers Centers

Occupancy rate (in percent) 85.0 85.0Average rental rate (per square foot) $9 $13

Source: Coldwell Banker Commercial Jim Stewart, Realtors

RETAIL MARKET

SENIORS HOUSING

Christus Health will build a340-bed long-term care cen-ter in Waco. The $22.7 million

project broke ground at the end of2000. The facility will include 240long-term care beds, 40 assisted-living

beds and 60 independent-living beds.The project is expected to be com-pleted by 2003.

T he City of Waco issued 39 per-mits for new commercial struc-tures in 2000. The Texas Restau-

rant Association forecasts 2001 salesin Waco will be $267 million, up 5.3percent from 2000. The Water Worksbuilding has been reopened as an up-scale steak house called 101 MillStreet.

A 70-room Quality Inn Suites Hotelis under construction at New Road andInterstate 35. The hotel is expected toopen in summer 2001. A restaurant isunder construction next to the hotel.On Highway 84 in Woodway, a $1.1million, 49-unit Ramada Inn was com-pleted in 2000. A 48-room Holiday InnExpress was completed during summer

2000. An 80-room AmeriSuites brokeground on LaSalle Avenue in 2000.

In January 2001, Yes!Less opened agrocery store on South Valley MillsDrive in Waco in a former HEB grocerystore. The shopping center is adding a4,900-square-foot building on the sitefor a restaurant.

17

Talbots opened a store on WacoDrive in January 2001. The $385,000building has 4,300 square feet. TexasKenworth moved its Waco dealershipto a site in Robinson in fall 2000.American Eagle Outfitters opened a5,200-square-foot store in the formerKinney Shoes location in RichlandMall in April 2000. Shoe Carnivalopened in Brazos Place Center at WestWaco Drive and North Valley MillsDrive in May 2000.

A new Saturn dealership opened inthe former Greg May Honda facility.The dealership opened in late 2000 af-ter $400,000 in renovations. O’ReillyAuto Parts is converting the formerpost office on Hewitt Drive into astore.

Richland Mall will be adding a Gate-way Country computer store during2001. JCPenney completed renova-tions on its mall store in November2000.

A new post office was built on ClayAvenue. The $3.8 million building islarger than the previous downtownpost office. In Woodway, Texas FirstBank constructed a $750,000 buildingat Highway 84 and Santa Fe Drive.

Crossroads Shopping Center under-went a $600,000 renovation in 2000.The owner of the center believes thatHewitt Drive will be the next growtharea, similar to Valley Mills Drive.Westview Village is being renovated at

a cost of $340,000 in hope of attract-ing new tenants.

Village Interiors of Dallas is con-structing a speculative building at1517 I-35 North by the Wal-Mart inBellmead. The 8,000-square-footbuilding will contain five commercialspaces, one of which will be occupiedby Radio Shack.

Bealls in Bellmead closed at the be-ginning of 2001. The Lake Air Mall willbe demolished and replaced with apower shopping center. Demolition isexpected to begin during summer2001. Lacy-Lakeview 6 Theater closedin September 2000.

2000 Office Property Statistics

Class A Class B

Central business district Occupancy (in percent) 85 80 Average rental rates (per square foot) $12.60 $8.40

Suburban Occupancy (in percent) 98 90 Average rental rates (per square foot) $13.20 $10.80


OFFICE MARKET

The Waco Chamber of Com-merce estimates the city has 1.3million square feet of office

space. Suburban office space is largelyfilled, while the downtown office mar-ket has vacancy. Rental rates rangefrom $6 to $15 per square foot.

The Veteran’s Administration Hospi-tal in Waco is expanding. A total of$12.4 million is being spent to expandand renovate the hospital’s acute men-tal health care facility.

Raso, Bailey, Dudley & Rose, an ar-chitectural firm, spent $300,000 to$400,000 to renovate the interior of a

downtown building that was built in1910. The firm relocated to the build-ing on Franklin Avenue from offices onNorth Valley Mills Drive during thesummer of 2000. Parrish, Moody andFikes, an accounting firm, is building a19,100-square-foot office building onWoodway Drive.

A campaign has begun to raisemoney for a $1 million, 7,500-square-foot headquarters building for Com-pany F of the Texas Rangers. Construc-tion on the Texas Rangers building atFort Fisher will begin in 2001.

The Lind Paper Company building

on South Third Street caught fire inJanuary 2000. The building was to beconverted into a $2 million officeproject. Although approximately30,000 square feet of the building hadto be demolished, the project wascompleted by the end of 2000. It hasthree floors, 24,000 square feet of of-fices and a restaurant.

The former Waco High Schooldowntown will be redeveloped into of-fice space. Houston investors pur-chased the school for $450,000. BirchTelecom opened a new office onSanger Avenue in 2000.

18

INDUSTRIAL MARKET

2000 Industrial Property Statistics

Warehouse Manufacturing FlexSpace Space Space

Occupancy rate (in percent) 95.0 95.0 95.0Average rental rates (per square foot) $2.40 $3 $3.30


Waco has several industrialparks. The 1,800-acreTexas Central Industrial

District is located near I-35 and High-way 6. The Texas Central Aeroplex has1,000 acres near I-35 and Texas StateTechnical College Industrial Airport. InMcGregor, an old naval base is beingdeveloped into an industrial park. TheWaco Regional Airport Industrial Parkis on 26 acres owned by the city. Ac-cording to the City of Waco Economic

Development Department, vacant in-dustrial land with municipal servicessells for between $12,000 and$22,000 per acre.

Frito Lay is planning to spend $2 mil-lion to enlarge and remodel its distri-bution center in Woodway. Theproject will add 12,475 square feet ofwarehouse space and three loadingdocks.

Patriot Homes completed a $5 mil-lion, 124,000-square-foot plant expan-

sion in early 2000. It is expected that90 additional employees will be hiredto produce more than 3,000 homes peryear.

The developers of the WilliamsTravel Center in Robinson plan tobuild 500,000 square feet of ware-house space and residential develop-ments in subsequent phases. This landis part of the new Robinson IndustrialPark.

CONCLUSION

501-25-1476

Waco is a growing communitylocated on I-35 betweenDallas and Austin. The

population has grown 1 percent per

year over the last decade. This growthrate is expected to continue over thenext 20 years. Companies are findingWaco an attractive place to do busi-

ness because of good transportationaccess. The industrial sector continuesto expand, adding new employers tothe area.

jennifer s. cowley

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