• October 24, 2014

Population, income draw shopping centers

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Posted: Sunday, January 5, 2014 4:30 am

Population, income and buying power are key indicators for developers constructing shopping centers.

“I think the thing that most retailers and restaurants are looking for is population (for the trade area),” said David Watson, managing principal of Dallas-based Direct Development, which developed the 82-acre site for Market Heights in Harker Heights. “There is a little science of trying to determine what the trade area is.”

Location, traffic and infrastructure are large factors, as well, Watson said, along with the area’s future growth potential determined by new home starts.

Copperas Cove met all those indicators for the developers of Five Hills, said Daniel Campbell, a principal of Endeavor Real Estate. The Austin firm is developing the retail center to its ultimate build-out of 127 acres.

“We saw that site as dead center on target for a retail area that was underserved and that would have great access by a new traffic system,” Campbell said.

Once finished, improvements to U.S. Highway 190 will help traffic from Killeen and Lampasas enter Five Hills, Campbell said.

Identify space

Long before construction begins, developers identify land with good traffic for shopping centers.

“The process took several years when a developer — in this instance, Gary Davis — was the first to identify a piece of property (for a retail development),” said Polo Enriquez, Copperas Cove Economic Development Corporation executive director.

The majority of Five Hills property was obtained in a land swap between the Copperas Cove EDC and Fort Hood. The land housing Market Heights was mostly owned by one family, said former Harker Heights City Manager Steve Carpenter.

“We had a piece of land that was on the highway,” Carpenter said. “We knew a long time ago that it was just a matter of time that things would move east (of Killeen). We knew that we had to have the infrastructure in place.”

Sufficient infrastructure and a city’s willingness to make improvements also appeal to developers, Watson said.

“It is critical to the success of the development. Without the infrastructure, frankly, the development can’t happen,” he said. “The fact that Harker Heights saw that and its willingness to participate is why Market Heights is what it is.”

Five Hills wouldn’t have developed as quickly without help from Copperas Cove officials through infrastructure and other incentives, Campbell said.

“That is what made it a viable project,” he said. “The most difficult years for a retail center is the first 10 years, because it is still growing.”

Copperas Cove EDC paid an estimated $1.8 million for the installation water- and sewer main through Five Hills.

Direct Development paid to install all of its infrastructure at Market Heights, but Harker Heights paid about $158,000 to increase the diameter of sewer and water lines through a portion of the project.

Tax agreements

The cities also entered into agreements to refund portions of property and sales taxes in the developments.

Harker Heights will soon pay off its five-year $3 million agreement with Direct Development.

Endeavor Real Estate is set to receive 25 percent of the property tax Five Hills generates for Copperas Cove. The developer also gets 35 percent of sales tax during the agreement’s first five years, increasing to 65 percent of sales tax revenue after 10 years.

Cove’s agreement ends at 25 years or $25 million, whichever comes first.

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