As the area’s population continues to expand, so do retail opportunities for Central Texas residents.
In December, officials secured the Killeen Town Center, which will bring new stores to southern Killeen.
“(Residents) will benefit by having more places to shop, people looking for jobs in our city will benefit, and the city will benefit not only from sales tax revenue but from water, sewer and solid waste,” Mayor Dan Corbin said. “New retail developments will also stop leakage to other cities. (People) will spend dollars here instead of going elsewhere.”
The Greater Killeen Chamber of Commerce works closely with developers to entice them to set up shop in the local market. John Crutchfield, the chamber’s president, said officials attend events for retailers and developers, such as the International Council of Shopping Centers, and cultivate relationships.
“We have a group of retailers and developers who we have established relationships with over time,” he said. “We provide them with demographic and economic information on the community and the region.”
Crutchfield said providing them with information places the city at the forefront of developers’ minds when retailers get ready to expand operations and add new stores.
Killeen Town Center
The Killeen City Council approved a rezoning request in December for a 431,486-square-foot development at the corner of Stan Schlueter Loop and Bunny Trail. The development will house a Walmart Supercenter, five junior anchors and six out-parcels, according to site plans. According to the developer’s website, the Killeen Town Center is expected to open in 2015.
Northwest Tidwell LTD, the developer for Killeen Town Center, requested several incentives from the city, which are under negotiation.
It wants the city to issue an annual sales tax rebate of 1 percent, which would be collected by the city until $2 million is rebated and structured as $250,000 annual payments for no more than eight years. Infrastructure improvements also were requested — a sewer line extension to the development and a traffic signal at the intersection of Stan Schlueter Loop and Bunny Trail.
The developer agreed to a minimum of a $48 million capital investment, a minimum of 500 full-time jobs in its first year and to maintain that many jobs throughout the term of the agreement. In accordance with the proposed 380 agreement, the development also will generate a minimum of $1 million in sales tax revenue annually.
The agreement references Chapter 380 of the Texas Local Government Code, which allows cities to provide assistance for economic development.
Crutchfield said the trend in major retail developments is to establish a major anchor store, like Walmart, which then brings in other retailers.
Development takes time
The chamber, along with city officials, began negotiations in early 2013 regarding Killeen Town Center, but typically bringing in a new development takes several years.
CVS, which opened in September, took about four years to nail down. But now that a store is in the local market, it can be replicated in other areas of the city more quickly because the risk is reduced, Crutchfield said.
“That’s why it only took a year for Walmart (to commit to another location),” he said. “They already have stores in this market. It’s a lot easier to convince someone who is already here than it is to recruit someone here.”
Killeen’s annual housing growth is what caught the eye of Northwest Tidwell LTD when the company began looking for markets in which to invest, said David Foor, a representative of the developer.
“When we first started looking, the (Killeen Economic Development Corporation) sent us information showing that Killeen was averaging about 900 new homes a year, even during the recession,” he said. “That’s very impressive and really what got us looking around the area.”
Foor said the city’s rapid growth leaves it with an unmet demand, but the biggest issue was convincing a retailer to establish a location away from U.S. Highway 190.
“Nearly all the retailers line the highway,” he said. “It was very difficult getting a retailer to come off of 190, but Walmart recognized the growth and they want to be where the growth is.”
Crutchfield said another thing developers look for is location.
“They want to know where the traffic is, the buying power of the community, leakage reports and product demands,” he said. “They want to see growth trends. Each developer has a different preference — some want to drill down into the numbers looking at population by age groups or household income, but it all starts with location.”
‘An interesting market’
Most retailers who establish a footing in the local market perform better than originally anticipated, Crutchfield said.
“Our market is an interesting market in that it overperforms,” he said. “That is because of the military influence in our community.”
Crutchfield said when retailers examine the numbers reflecting household income, those numbers tend to be lower than expendable income.
“For example, the (basic allowance for housing) and similar income has an impact that doesn’t get reflected in the numbers,” he said. “We have to spend a lot of time talking to potential retailers about the numbers and what they mean.”
Killeen also hosts several establishments that can’t be found in any other city in Texas, like the Carolina Ale House, whose other locations are in South Carolina, North Carolina, Georgia and Florida, as well as Old Chicago Pizza and Tap Room.
“It’s a remarkable thing about Killeen that a lot of people don’t recognize,” Crutchfield said. “Their Killeen location is the first in the state because they saw this market as being desirable.”
As the market continues to build its reputation, he said, more businesses will begin eyeing the community.
Sales tax revenues account for nearly 30 percent of Killeen’s $243 million budget.
“Retail is a tremendous source of sales tax revenue,” Crutchfield said. “Cities are very interested in sales tax, and every retail store creates property tax and ad valorem taxes that spin off of that. The bigger the development, obviously, the more tax revenues.”
Killeen raked in more than $20.3 million in sales tax revenues in its 2013 fiscal year and estimates $21.2 million for 2014.
Besides adding revenue to the city’s coffers, the businesses also provide employment opportunities.
The Killeen Town Center development is expected to create 777 jobs in its first five years, once fully occupied, and generate a minimum of $1 million in annual sales tax.
City Manager Glenn Morrison said retail development is “a positive indicator of the strength of our economy.”
“As our community continues to grow, these developments in new corridors will play a very important role in quality of life and economic progress,” he said.
Crutchfield said the city can support “a great deal more” retail business and as the city’s reputation grows and stores continue to do well, a wider variety of retailers will begin looking at the area.
“There will be higher-scale retailers who will begin looking at the community,” he said. “That’s a transition that occurs in communities and it’s one that will occur here over time.”