TEXAS SNAPSHOT, JANUARY 2009

Corpus Christi

The Coastal Bend area of Texas, which includes Corpus Christi and several smaller communities, has grown during the past 15 years with two major industries emerging: hospitality and petrochemical.

The natural beauty of the Corpus Christi Bay provides an excellent setting for the Texas State Aquarium and Lexington (aircraft carrier) Museum on the Bay, which are big tourist draws for the city. Together with the beaches on the Gulf of Mexico along Padre and Mustang Islands, Corpus Christi is a thriving tourist destination — especially for vacationers within Texas. Over the past 5 years, the city and surrounding area have seen no less than 15 new motels come on line. Older high-rise hotels on the waterfront have been renovated, indicating a continuingly strong tourist influx. The local convention and visitors bureau has met or exceeded booking for conventions in the recently upgraded and expanded convention center in 2007 and 2008. The new, 10,000-seat American Bank Arena has allowed the city to bid on bigger convention gatherings and will continue to play a big part in convention business in the near future.

In terms of the petrochemical industry, the Port of Corpus Christi is the sixth largest port in volume tonnage in the nation and is home to six refineries and their terminals on the port. While the building of new refineries is not in the near future, all the refineries are constantly doing maintenance and environmental upgrades, which is a source of revenue for local industries. Recent federal mandates to produce low sulfur emission gas has dictated that most refiners do extensive upgrades to meet these guidelines. Several of the refinery owners have announced multi- million dollar investments that will be made over the next 10 to 12 years, which continues to feed local industries with good, long-term contracts.

There are two significant transactions that will have a big impact on the local market. These include the sale of the largest retail mall and the closing and redevelopment of a local military base. 

In July 2008, the sale of Padre Staples Mall to Fort Worth, Texas-based Trademark Property Company was big news. The mall’s name was changed to La Palmera, and it is noteworthy that the ownership moved from the long-time local owner/developer to an investment group that owns numerous mall and retail properties and is looking to invest up to $165 million in renovations and expansions of the 37-year-old mall. Upgrades will include additional out parcels, office space and a new hotel on the current grounds. With this type of institutional investment in local retail, Corpus Christi will be able to boast of a destination shopping experience for tourists coming for the beach and vacations.

One of the small communities across the bay from Corpus Christi is Ingleside. Ingleside is home to a large, oil platform manufacturing facility; small, local, fishing industries; and Naval Station Ingleside. The naval station was built in the late 1990s and early 2000s to be the Navy’s mine warfare training facility. The BRAC committee of 2005 announced the closing of the facility in 2010. Since this announcement, discussion of the base redevelopment has been long and varied. What is known is that of the 1,067 total acres, 912 acres will revert to the Port of Corpus Christi in a reverter clause when the Port first sold the land to the Navy. The Port has indicated that it intends to transform the facility into a container port and get into the lucrative container business. Other options are being explored, but whatever happens to the facility, the whole Coastal Bend area will be a beneficiary of the Navy’s investment.

In 2008, retail developers noticed Corpus Christi in a way not seen in many years. Not only was there the sale of Padre Staples Mall now called La Palmera, but there also were two additional retail developers looking to come to town. Just outside of the Corpus Christi city limits, an outlet mall is on the drawing board.  The local county sold land adjacent to a recently finished convention and meeting facility featuring livestock-showing arenas and a yet-to-be-built equestrian facility. The idea is to boost traffic to the new facility and develop retail shopping in the area. This new outlet mall fronts on Highway 77, which is the major highway to Brownsville, McAllen, Harlingen, and South Padre Island  — all of which are on the border with Mexico.

Another retail developer put 218 acres under contract with plans for a new indoor/outdoor mall concept, complete with fountains, walking areas and out parcel sites. The developer secured tax benefits and incentives from the city. The development is named Crosstown Commons due to its location fronting Crosstown Freeway, one of the major arteries in the city.

Both of these developments have experienced delays in securing the needed tenant leases to start construction. This has been further complicated by the downturn in the national economy. We are hopeful that both of these new retail developments will come to fruition and make Corpus Christi truly a destination shopping experience for travelers and vacationers alike.

All indicators show Texas to be fairing better in this economic downturn than many others. Texas — one of 17 states showing positive employment growth — has a very diversified economy and a heavy petrochemical base that together seem to provide some insulation to the cyclical trends experienced from time to time. Corpus Christi has never been a city to experience extreme economic highs and, consequently, does not experience extreme economic lows. The employment base is heavily vested in government and quasi-government, such as military and military contractors, government (county and state) school districts, and hospitals both county and private. To a much lesser degree, the region’s employment does rely on private enterprise, which is effected more by economic shifts. Corpus Christi’s hospitality industry should remain stable, or even grow, in this downturn, because the city is uniquely able to offer affordable entertainment with minimal travel costs to most Texans.

— Wayne Lundquist, Jr. is the vice president of Cobb, Lundquist & Atnip, Inc. in Corpus Christi, Texas.

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