MCALLEN, RGV – Keith Patridge, president of McAllen Economic Development Corporation, and Ralph Garcia, MEDC’s vice president for international business recruitment, are currently on a trip to South Korea and Japan to secure more business for the Rio Grande Valley.
However, if they are successful in getting more corporations to move to the Valley, they may not actually locate in McAllen. It may have to be in neighboring cities such as Pharr, Mission, Edinburg or beyond. The reason? McAllen is running out of industrial buildings.
For the past year and a half, MEDC leaders have been saying that industrial park space within the city limits is at a premium. The subject came up again at an MEDC board meeting on Thursday when Jamie Sepulveda, the group’s executive vice president, gave the President’s Report in Patridge’s absence.
“We have 20 active projects right now. That means companies are currently considering our area for their investment, and they are either working with Janie or Ralph, on bringing these companies to our community. Of these 20, six have already been presented to the (city) commission for incentives consideration. We need buildings for these companies,” Sepulveda said.
Janie is Janie Cavazos, vice president of U.S. business recruitment.
“You have heard us over and over say, over the past year, year and half, we have a shortage of buildings in McAllen,” Sepulveda told the board.
“We need over 700,000 square feet of space and yesterday, Janie was telling me she got contacted by two companies that need an additional 100,000 square feet. They are looking forward to bringing their companies to McAllen. We are hearing companies in Reynosa say they want to bring part of their operations to McAllen. They are moving their operations from China over to Reynosa or here. There is a lot of activity. A lot of conversation, which is very positive for our area, but we do need buildings in McAllen.”
After the meeting, the Rio Grande Guardian and RGV Public Radio 88 FM secured an in-depth interview with Cavazos. Asked, on a scale of one to ten, how serious the lack of space for new manufacturing companies is, Cavazos gave it a nine.
“I currently have seven projects I am working on, totaling about 700,000 square feet. This is all new construction for the McAllen area. Keep in mind, this is only for McAllen, I don’t work outside of McAllen. Most of these companies are looking for 50,000 to 100,000 square feet, which is good for us. And we do have some developers that are currently looking at constructing 300,000 square feet,” Cavazos said.
“Yesterday, I had two leads for cold storage and each one of them is at about 100,000 square feet on the U.S. side, so that is a total of about 200,000 square feet. Meanwhile, Ralph and Keith are in Korea right now, trying to bring new industry us. So, what we are doing right now is working with our local developers and Mexican investors that are interested in coming to the U.S. to buy land and hopefully construct some industrial parks and some spec buildings.”
Some of the projects Cavazos is working on are in the cold storage food processing business. Others are in automotive or plastic injection projects.
Cavazos said she is working right now with one particular Mexican company, run by two brothers, that is looking at buying property in McAllen to build an industrial park. “They see the need.”
Cavazos confirmed the points Sepulveda made with the President’s Report. “Now, what we are also seeing is a lot of activity on the Mexican side from companies that are looking to move their capital-intensive operations, such as plastic injection, machine-type divisions, to the U.S. side.”
The MEDC VP confirmed that it is not just new warehousing space that is needed. Buildings for manufacturers is also at a premium, she said.
“It is not just your regular distribution-type facility. We are looking at manufacturing space for different processes, assembly, machining, which means most of these buildings need to be standalone. Most of these companies do not want to be in a multi-tenant process because they do metal stamping, etc. So, when we talk about industrial buildings that we need, they are more for the manufacturing.
“Now, keep in mind, that on the produce side we are seeing some food processing companies, they are bringing equipment to do a process work. For example, we have one company that handles okra, and so they have a process where they batter the okra, they have to boil the okra, fry it, that type of work is not your typical warehouse, distribution type. It is manufacturing because they do have a lot of heavy equipment.”
Cavazos said a lot of the food processing and warehousing companies that are moving to the Valley are coming because of the new superhighway that connects Tamaulipas to Sinaloa. “Historically, that would go to Nogales, Arizona. Now we are seeing them come through our ports of entry.”
Cavazos said most manufacturing companies want to be in an industrial park because infrastructure is already in place. “They do not want to be in a multi-tenant situation. Most of the companies want 100,000 square feet of of space for themselves. They do not want to have any neighbors because the processes they have, sometimes it is too loud or there is too much traffic. They want standalone.”
Nine out of Ten
Asked, on a scale of one to ten, how bad the shortage of industrial space is, Cavazos said:
“I would say it is a nine. There is no space right now in McAllen. All the buildings are in use. There might be some that have 30,000 square feet, or 10,000 square feet. But these companies need big amounts. They need 100,000, 75,000, 150,000. We are in desperate need of industrial buildings in McAllen. We are talking to the developers. They are the ones that are going to invest in buying the property, constructing the buildings. We have the projects. This is what I tell the developers, build them, they (the manufacturing companies) are here. They need to build so we can put these companies in those buildings. What is delaying some of these projects is the fact that we don’t have the buildings. We are running out of land.”
Asked how bad the situation is, Cavazos said: “We are losing, a lot. We work it very hard and I get upset when I lose a company.”
Cavazos gave examples of some of the business McAllen has lost because it lacked industrial space.
“We lost three projects that we worked on for at least two years and one of them went to Edinburg, another one went to Pharr, and the other one went to Weslaco. And these are companies that needed 100,000 square feet, or 125,000. These are projects that were in the millions. One was a $28 million project and so yes, the fact that we did not have the buildings already, readily available is the reason we lost out.”
Cavazos acknowledged that she and the MEDC team do much of the work to get a new manufacturing or distribution company to come to the Valley but other cities “get the fame and glory.” Not to mention the property taxes. “Take, for example, CK Technologies, they located in Brownsville. They had the space they needed and the height, they needed a building 50 feet tall. After working that for two years, the only reason we lost it was because we did not have the building.”
Another example, she said, is TS Tech America, Inc.
“They took 150,000 square feet in Hidalgo at the Tres Puentes Industrial Park. The only reason we lost them is the building was readily available. They (Hidalgo Economic Development Corporation) had the size of building they needed. They (TS Tech) are the largest supplier to Honda and they manufacturer the car seats for Honda. We lost that company because we did not have the building. On a scale of one to ten we are seriously in need of buildings.”
Asked what the city leadership in McAllen is saying about the situation, Cavazos said: “They want to see new construction. They want to see a building that will eventually be part of our tax bracket.”
However, sometimes, a company cannot wait for a new building to go up.
“They do not have the time because it takes like 18 years to two years to build a building. Their customer is saying, you need to be in place by this time because we need to start working with you. Some of these companies are on a timeline that, you know what, if we can find a building in Edinburg, we are going to go. After we worked them, provided all the data they needed, all the research, such as, am I going to find a skilled workforce; we put all that information together and then at the end we do not have a building and so they locate someplace else.”
Another example Cavazos cited is Black & Decker.
“Look at Black & Decker, we worked it for two years. It was an operation that is going to employ over 500 people. Mission had the building and Black & Decker did not have the time to construct a new facility. We were really pushing to get them to give us time to build the building for them. We even had a developer that was interested but because Black & Decker was in a time crunch they took the former Vanity Fair building which is 270,000 square feet, so now they are in production. But it is a project we, MEDC, worked for two years.”
Cavazos pointed out that Black & Decker was a $40 million investment. “Last night we went to the reception for their corporate VIPs. They had seven of the people that I worked with, we were invited to the reception because we worked them but at the end of the day, last night, I gave a little speech and I had to say, ‘Welcome to Mission.’ I do not like doing that. I want to say, ‘Welcome to McAllen.’ They realize we worked it but at the end of the day, our board and our mayor, they want companies in McAllen.”
Cavazos said McAllen does “have” Sharyland Business Park, but, unfortunately for the city’s tax rolls, half the park is in Mission.
“Some of those buildings are in Mission, so they don’t count as McAllen. The business park straddles both cities. Take for instance CommScope Technologies, or Karlee Manufacturing. They are in Mission, even though they are in the Sharyland Business Park. We worked them, they are in Mission, they are not in McAllen. Yes, the Sharyland Business Park is tied together with McAllen but, at the end of the day, when we make a commitment to a company, if it is in Sharyland Business Park but it is in Mission, it is Mission, not McAllen.”
Another example of a lead Cavazos worked that ultimately did not land in McAllen is Index Fresh.
Index Fresh is right by the Pharr Produce Park. I worked with them for two years but at the end of the day they wanted to be close to the Pharr Bridge and so they built a $28 million facility. It is beautiful and of course the president of the company, when they did the groundbreaking ceremony, he invited us. We went, and when they did the ribbon-cutting ceremony, we were invited, and it is great. But, it is not in McAllen.”
Wrapping up the interview, Cavazos said: “It is getting very serious. If Keith and Ralph come back with more companies, I do not know where we are going to put them.”