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2 months ago
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MISSION, Texas – The Rio Grande Valley is no longer a secret to the big franchise stores. They know about the region and they want to be here.
This is the view of Daniel Galvan, principal broker at Coldwell Banker Commercial-Rio Grande Valley.
CBC-RGV is a full-service real estate firm based in McAllen that services all of South Texas.
Galvan gave his analysis of the current state of real estate in the RGV at a recent Rio Grande Valley Partnership 2024 Leadership Class event. It was held at the Center for Education & Economic Development in Mission.
“We used to be a little bit of a secret down here, right? Not anymore. We’re on everybody’s radar. Everybody wants to be here. We have a list of franchises that want to be in our market, but don’t have franchising. It is just another testament to the strength of our region,” Galvan said.
Galvan told the Partnership’s latest leadership class that real estate in the RGV is “special and unique.”
He said: “If you watch the financial news, it paints a totally different picture than the picture that we’ve got going on in the Rio Grande Valley. There are external forces contributing to the Rio Grande Valley that can make us very resistant to recession when the rest of the country is actually feeling recession, right? And so we’re very lucky to have some of the best real estate market conditions in the country.”
Galvan said the demand for retail space and commercial pad sides in the Valley has never been higher. He said everything that is being built is quickly being leased.
“That’s a testament to the demand. There is an extremely high demand for commercial land and retail in the space.”
Galvan said land prices and rental rates continue to be very inflated across the Valley.
“Just like everything else, including milk and diapers, real estate is really expensive right now. Despite that, people are still buying and still renting. Another testament to the pent up demand.”
Office space
However, that does not include office space, Galvan explained.
“It is no secret that the office sector of the commercial real estate world is severely hurting. That is on a national scope. You’ve seen articles out there about high rises in Manhattan and Chicago being converted into condos.”
But, you will not see that in the Valley, Galvan was quick to point out.
“What we call a Class A product in our market, something like the tower at Rio Bank. Typically, a mid- to high-rise with amenities and common areas, actually those are renting. All those buildings have really good occupancy levels. That’s pretty important. That’s really, really good. That’s a really good sign of our region (doing well),” Galvan said.
“Like I said, you’re seeing high rises in the metros, in Chicago, in Houston, they’re being converted to condos and apartments. You’re not going to see that happening in the Valley. Office is probably the one sector in our real estate market that has been just quiet. There’s not a whole lot of growth but not a whole lot of negativity either.”
Subdivisions
Subdivisions continue to be developed across the Rio Grande Valley, Galvan said.
“All you’ve got to do is drive around and you see subdivisions being developed everywhere. Gated, un-gated, duplexes, fourplexes. I mean, everything. And it’s still coming out of the dirt.”
That said, there has been a little bit of a slowdown, Galvan said.
“If you do some homework and do a little bit of investigating with the cities you’ll see that there are still a lot of subdivisions in the design and permitting process. So you’re going see some more stuff divisions coming out of the ground.”
Apartments
With apartments, the demand is there, Galvan said.
“In addition to subdivisions you are seeing apartment complexes. Apartment complexes that we’re not used to seeing, 200, 300 units, right? We’re used to seeing those in San Antonio, Austin, Houston, not the Valley. But they are starting to become more common. And so it’s… just, again, another sign of the strength of our region.”
Multifamily
Galvan said the multifamily housing sector has started to cool down a little.
“All the stuff that you see coming out of the ground now was designed and permitted 18 months ago, right? And so I don’t think you’ll see a whole lot of new products with the multifamily stuff.”
Industrial
Galvan said there’s a “large pipeline” of industrial space currently in the design, permitting and development stage.
“There was a time where industrial space was hard to come by. It was almost impossible to find the industrial space. It is still really challenging, but there’s going to be a big inventory of new construction industrial coming up out of the ground,” Galvan predicted.
“You’re going to see this in areas like the Pharr International Bridge, (and) near the McAllen Foreign Trade Zone. Roma’s got a new industrial park coming out of the ground and so the entire Rio Grande Valley is seeing industrial development. Weslaco just had their the ribbon-cutting for their industrial park. Industrial will continue.”
In the Valley, a “big, driving factor” for industrial space is fresh produce, Galvan said. “The Pharr Bridge is one of the top two or three crossings for produce in the entire country. And so that’s pretty incredible.”
Top named brands
Galvan said the Valley continues to see new franchises, concepts, and companies looking to establish a presence in the Rio Grande Valley.
“We can talk about Top Golf, Costco, on the retail side. We can talk about the Zoho campus coming to McAllen. And SpaceX is continuing to grow. The LNG project, $20 billion. This is all new stuff. These are people that are new to the market. We see new franchises like Jersey Mike’s, Dutch Bros coming in.
“These are all people who… we used to be a little bit of a secret down here, right? Not anymore. We’re on everybody’s radar. Everybody wants to be here. We have a list of franchises that want to be in our market, but don’t have franchising. And so it is just another testament to the strength of our region.”
Editor’s Note: Here is an audio recording of Daniel Galvan’s remarks to the Rio Grande Partnership’s 2024 Leadership Class. It includes a Q&A with those in the audience:
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