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    Rio Grande Guardian > Border Business > Story
checkNew study shows growth in Valley's retail sector has returned
Last Updated: 13 March 2014
By Staff
Mike Blum, managing partner of NAI Rio Grande Valley. (File photo: RGG/Joey Gomez)
McALLEN, March 13 - Mike Blum, managing partner of NAI Rio Grande Valley, has published his latest study on the retail market in the Rio Grande Valley.

Here is his report:

The Changing Retail Market in the Rio Grande Valley

If you left the Valley in 2008 and just returned you would only need to drive our new Interstate highway (I-2) from the west side of Mission to Brownsville to see that there has been explosive growth in the region and particularly in retail development along the corridor.

In that time frame JC Penny opened new stores in Mission, Edinburg and Weslaco. Costco opened in Pharr while Sam's built its 2nd store in N. McAllen. Burlington Coats added stores in Edinburg, Weslaco and Harlingen. Academy expanded in McAllen, Edinburg, and Weslaco. The Bass Pro Shop in Harlingen continues to attract other retailers to the area, including Sam's Club to open in the spring of 2014. La Paloma Power Plant's, a 690 megawatt natural gas-fired plant to be constructed beginning in 2014 on the eastern edge of Harlingen.

So what has that meant to the cities along the corridor?

Here are the Sales Tax Collections - 2013 versus 2008, data from Texas Comptroller:

San Benito: $3.85 million in 2013 - $3.99 million in 2008

Brownsville: $33.78 million in 2013 - $33.69 million in 2008

Harlingen: $21.08 million in 2013 - $19.68 million in 2008

Donna: $1.96 million in 2013 - $1.57 million in 2008

San Juan: $3.07 million in 2013 - $2.55 million in 2008

Mercedes: $7.43 million in 2013 - $5.73 million in 2008

Weslaco: $11.26 million in 2013 - $8.98 million in 2008

Pharr: $13.16 million in 2013 - $11.42 million in 2008

Mission: $14.40 million in 2013 - $13.06 million in 2008

Edinburg: $16.91 million in 2013 - $14.22 million in 2008

McAllen: $60.65 million in 2013 - $58.86 million in 2008

It is undeniable that McAllen, with over $60 million in sales tax collection in 2013, remains the retail center of the Rio Grande Valley. Its growth from 2008, while only three percent, is confirmation that the worst of the recession has passed and retails has returned. The economic recovery is obviously all across the Valley; Brownsville is showing improvement with sales tax collections higher than 2008, their previous best year. All the other cities in Hidalgo and Cameron County had considerable growth in their sales tax revenues with the exception of San Benito. This growth in sales tax collections generally goes directly to property tax reductions and increased investment in public infrastructure.

Percentage Change in Sales Tax Collections, 2008 versus 2013, data from Texas Comptroller:

San Benito: down 3.6 percent

Brownsville: up 0.3 percent

Harlingen: up 7.1 percent

Donna: up 24.7 percent

San Juan: up 20.1 percent

Mercedes: up 29.7 percent

Weslaco: up 25.3 percent

Pharr: up 15.3 percent

Mission: up 10.3 percent

Edinburg: up 18.9 percent

McAllen: up 3.0 percent

Mercedes is the leader among these cities in percent increase over 2008 which is due in part to a number of new stores at the Premium Outlet center. Four hundred shops is an amazing collection of retail venues. Weslaco's dramatic increase is due in part to the new retail cluster anchored by JC Penny and Academy. Pharr's increase is arguably due to the addition of Costco and the nearby cluster of restaurants.

Mexican shoppers historically were the primary reason why McAllen had the dominant share of the retail pie. And with the increase of IVA tax in Mexico border cities, this may indeed return as its market share reduces. There is another component that has a material influence on McAllen stability and market dominance: the hospitality sector and specifically hotels.

Hotel Rooms, 2nd Quarter, 2013, data from Texas Comptroller:

McAllen: 3,400 rooms, 31.1 percent of total

Edinburg: 589 rooms, 5.4 percent of total

Mission, 624 rooms, 5.7 percent of total

Pharr: 1,072 rooms, 9.8 percent of total

Weslaco: 756 rooms, 6.9 percent of total

Mercedes: 115 rooms, 1.1 percent of total

San Juan: 238 rooms, 2.2 percent of total

Donna: 262 rooms, 2.4 percent of total

Harlingen: 1,282 rooms, 11.7 percent of total

Brownsville: 2,411 rooms, 22.0 percent of total

San Benito: 196 rooms, 1.8 percent of total

TOTAL: 10,945 rooms, 100 percent of total

McAllen has over 3,400 hotel rooms. If each room was occupied 365 days a year, that's the equivalent of 1.2 million people, if there was only one person to a room. If the hotel occupancy rate was 50 percent that computes to 744,000 people who don't live in McAllen but are here eating and shopping and effectively adding to the economy. That's a major influx of people that keep McAllen's cash registers ringing.

So, now you understand a little about what has happened to the Valley over the past five years, start to ponder what the future holds and how each city will act or react to the changes before them.

Write Staff

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