TEXAS SNAPSHOT, DECEMBER 2006

McAllen/Mission Office Market

New office development is mostly found in the medical or medically related arena in McAllen/Mission, with some small-scale office space associated in retail centers, according to Mike Blum, partner and managing broker with NAI Rio Grande Valley. The ranges for office rental rates run from $12 to $20 per square foot NNN. “The rates depend on many variables including, location, amenities, finish allowances and CAM charges,” Blum says. “Land and building costs in the McAllen area have increased materially, which also affect lease rates. The disparity between older office space and new projects built in the last few years also adds to the rate variation.” The vacancy rate in the market is less than 10 percent.

One notable transaction recently occurred in the McAllen/Mission office market when Brookfield Asset Management acquired the 150,000-square-foot Chase Bank building. Anchored by Chase Bank, the Neuhaus Tower, as it is known, is now under new management and will be marketed as a new destination for corporate clientele moving into the greater McAllen area. In addition, the San Antonio-based law firm of Cox Smith Matthews recently opened its new office in the area. The office is located in the Commerce Center West Building in the 495 Commerce Center Development, a 110-acre master-planned office and business park in McAllen.

At the moment, there aren’t any new large office projects underway in McAllen/Mission, according to Blum. “This area is not a headquarters location and does not attract the kind of office users requiring large-scale facilities,” he says.

While there may not be a lot of new office development taking place, the retail market is hot, spurring activity across the two-city area. The Palms Crossing in McAllen and the H.E.B./Target center on Expressway 83 in Mission are the most notable, according to Blum. “A new Target and a new Wal-Mart Supercenter opened in October in McAllen on Nolana Avenue, and another new Wal-Mart Supercenter is scheduled to open in Edinburg on McColl and Trenton in November,” he says. A future retail development on North 10th at Trenton called Plaza del Norte has announced Best Buy as its mini anchor to the 400,000-square-foot lifestyle center. In addition, Old Navy recently opened its second McAllen store in the Trenton Crossing project, next to Kohl’s.

— Mike Blum is partner and managing broker with NAI Rio Grande Valley.

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