In San Marcos, Texas, retail races to catch up with growth

The fastest­growing midsize city in the U.S. for three years running happens to be in Texas, but it is not Austin, Dallas–Fort Worth or Houston. No, the honor goes to San Marcos, a quaint Texas Hill Country town halfway between Austin and San Antonio that is growing at an annual rate of nearly 8 percent, according to the U.S. Census Bureau. The population has more than doubled, in fact, since 1990 — from nearly 29,000 then to roughly 60,000 now. While such demographic prosperity is producing an abundance of new and renovated retail projects in San Marcos, the city has actually been synonymous with retail for decades.

For years an excursion anywhere near San Marcos often included stops at one of its two thriving outlet malls: Tanger Factory Outlet and San Marcos Premium Outlets, neighbors on Interstate 35. The malls form a virtual who’s who of outlet retailers, offering shoppers 350 stores and 1 million square feet of retail in the aggregate. ABC’s The View even named the site “third­best place to shop in the world” nine years ago. More recently, a competitive assessment commissioned by the Greater San Marcos Partnership, a regional economic development organization, shows that some 14 million shoppers visit one or both outlets annually, with Tanger estimating that it gets about 10 million visits per year.

Moreover, Texas State University and its nearly 36,000 students offer both an inherent workforce and a customer base. This helped persuade Austin­based Endeavor Real Estate Group, developers of North Austin’s prosperous Domain mixed­use complex, to buy the struggling Springtown Center, in midtown San Marcos, late last year from a number of owners. Endeavor is investing $27.5 million to revitalize and retenant the 230,000­square­foot complex by 2017. The developer’s vision calls for retailers and restaurants new to the city and a significant entertainment component, according to Buck Cody, a principal at the firm. Already, the shopping center has signed The Spot — which features a six­screen dine­in movie theater, bowling lanes and bar­restaurant — Gold’s Gym and a performance center.

This past summer Amazon.com announced that it would build an 855,000­square­foot fulfillment facility here, east of I­35, set to employ 350 when it opens in 2017 and at least 1,000 by 2022. “We are gathering a lot of momentum,” said Adriana Cruz, president of the Greater San Marcos Partnership. “Our location in the dynamic I­35 corridor, combined with our housing growth and workforce, is stimulating a lot of activity.”

The lively downtown business district, already home to some 150 mostly locally owned shops and eateries, has an Aqua Brew pub­restaurant under construction, to join recent additions Louie’s Beer Garden & Seafood Shack and Kent Black’s BBQ. The city has invested some $70 million in street and sidewalk improvements to make the downtown more pedestrian ­friendly.

Meanwhile, the San Marcos market for small­shop space remains tight, says Ian Pierce, a spokesman for the Dallasbased Weitzman Group leasing firm. Not long after a university­area post office closed for budgetary reasons, investors snapped up the 18,000­square­foot vacated building and remade it as Guadalupe Station, which is now fully leased to the likes of Jersey Mike’s Subs, Smoothie King, Sport Clips and Torchy’s Tacos.

As retail chains seek growth beyond the saturated major markets, they often turn to places like San Marcos. “When developers ask for our demographics [and] then see the dynamic nature of the town, plus the university and all the potential job creation, they are getting excited and looking for opportunities here,” Cruz said.

Still on the city’s wish list are destination attractions such as a theme park, additional outdoor recreation venues and fine­dining restaurants, Cruz says. “We have the land, and we have the space,” she said. “We’ve just reached the tip of the iceberg.”

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