TEXAS SNAPSHOT, APRIL 2008

Waco

McGowan

Currently, we are seeing a tremendous resurgence in downtown office development in the Waco market, says Chris McGowan, director of urban development for the Greater Waco Chamber of Commerce. In the next year, there will be the unprecedented addition of more than 150,000 square feet of Class A office space in downtown Waco with more to come. A majority of the space that is being developed is speculative Class A lease space.

Another major trend is the development of close to 400 acres of professional and medical parks in the southwest corridor of Waco. “Development in the southwest region of Waco is driven by the both the expansion of regional health care facilities and record residential housing starts in this area,” McGowan says. “The completion of the $48.5 million Providence Health Center expansion, the construction of Hillcrest Health System’s $184 million campus and the announcement of a $48 million expansion by the Central Texas VA Health System within a 2-mile radius are driving construction of Class A lease space for ancillary medical and professional services.”

Significant business park additions in the Southwest area include Central Professional Park, Legends Crossing, Point West and Ridgewood Professional Park. At full capacity, these developments forecast the addition of 650,000 square feet of professional and medical office buildings, McGowan says.

In addition to this new development, several leases recently have closed in the Southwest corridor. Waco Center for Women’s Health and Heart of Texas Pediatrics leased 18,000 square feet and 12,000 square feet, respectively, in the Central Texas Medical Center.  Jackson Health Care completed a 10,000-square-foot lease in the Texas Central Park.

There is considerable interest in downtown office development, partly due to the nationwide trend toward downtown revitalization and partly due to a strong commitment from local leaders in both the public and private sectors to ensure a healthy sustainable future for our urban areas. The renovation of the historic Roosevelt Hotel into Class A office space in downtown Waco; the construction of the new mixed-use Waco Town Square; the new Chamber of Commerce headquarters; and a new Wells Fargo Bank building all within a block of each other are leading the way in the office market as a part of the resurgence of downtown Waco. The range for Class A rental rates downtown currently is $1.25 to $1.55 NNN.

“Most of the development activity we are seeing in downtown Waco is homegrown,” McGowan says. “We have one developer that is new to Waco, Michael Wray of Brazos Urban, LLC, who is building a new Waco Town Square project. Mr. Wray brings more than a decade of experience building mixed-use urban infill projects in other major metropolitan areas in Texas including Houston and Austin.”

The Greater Waco Chamber of Commerce has recently announced its goal of realizing a Billion Dollar Decade. By bringing together key investors, and working under a common vision, the chamber predicts $1 billion of new development in downtown Waco and along the Brazos River corridor. More than $120 million of new private investment has been announced in downtown Waco over the past year. Coupling that with a large public commitment totaling more than $200 million of new public improvements in the same area begins to paint a picture of a very bright future for downtown Waco.

“This is truly a defining time for the city of Waco as the downtown area is poised on the heels of these developments and others, for the first time since the late 1950s, to re-establish itself as the hub of commercial activity for all of Central Texas,” McGowan says.

— Chris McGowan is director of urban development for the Greater Waco Chamber of Commerce.

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