Waller Is Growing. Developers And Manufacturers Want In.

The city of Waller is about 45 miles northwest of Downtown Houston. For some Houstonians, it’s just another small town along Highway 290, something you wouldn’t even notice passing through on your way to Austin, except for the lure of a Buc-ee’s bathroom break and snacks.

Though rural in appearance, Waller and the surrounding area have been undergoing steady industrial and residential growth over the last five years. The low cost and availability of land near the intersection of two major highways have placed Waller on the map for developers and manufacturers.

Waller County Land Co. owner Tim Phelan said that when he moved to Waller in 1982, it was evident even then that the city was sitting in the path of growth.

“Here we are, 38 years later, and we've got a brand-new freeway, and all sorts of development going on. It's still kind of rural here, but it's exciting because there's lots of new things coming our way.” 

Waller’s population sits around 3,500. While that may seem like a small number, the population has grown by nearly 50% in the last 10 years, reflecting job growth and industrial development in the surrounding area. It also is the hub of the broader Waller Independent School District area, which has roughly 37,600 people.

The Grand Parkway, Houston’s outermost loop, is less than 10 miles away from Waller and is credited with boosting Waller’s accessibility. The completion of Segment E in 2013, which extends from I-10 to Highway 290, provided commuters an alternative way to get around the greater Houston area, and made Waller more attractive to a future workforce.

The completion of Highway 290 construction also played a major role in improving accessibility, especially for the distribution of goods.

“We can draw from a pretty large area because of the logistics of people getting here. They either drive through the countryside to get here, or they're driving against the main congestion and commuter times,” Waller Economic Development Corp. Director John Isom told Bisnow.

From an economic development standpoint, the combination of Highway 290 and the Grand Parkway has proved to be a strong draw. Isom said much of Waller’s industrial growth has come from companies that have outgrown their space further south in Harris County, and are looking for a place to expand.

When looking at Waller’s growth, it is impossible to ignore the impact of the Daikin Texas Technology Park. Though not within Waller’s city limits, the Daikin facility has drawn the interest of other companies looking for large tracts of land with distribution access.

Japan-based Daikin is the largest manufacturer of heating, cooling and ventilation equipment in the world. The company purchased around 500 acres and began construction of a 4.2M SF manufacturing facility in January 2015. The plant officially opened in May 2017, drawing around 7,000 people into the area each day for work — double the city’s official population.

“You can't have an economic development conversation in this region without mentioning Daikin. They're absolutely the big guy,” said Alegacy Group founder Bob Nickles, who owns a business park in Waller.

Since Daikin announced its intention to build a facility, other businesses have made their way to the area. Phelan told Bisnow he sold a 40-acre tract to China-based Broad-Ocean Motor Co., right across Highway 290 from the Daikin facility. Broad-Ocean is a supplier of Daikin, and now boasts its own 480K SF manufacturing and distribution facility nearby.

Within the city of Waller, the impact of the Daikin facility has mostly led to more residential development in the last five years. Isom pointed to two taxpayer-subsidized apartment buildings totaling 160 units, as well as The Ranch at Waller apartments, a 224-unit, market-rate multifamily complex. The city has also been getting some scattered increases in single-family homes. Its housing stock went from 872 single-family and multifamily units at the 2010 census to 1,268 units at the end of 2018, a 45% increase.

“All of those came after Daikin made their announcement, people knew there'd be a push in need for housing out here,” Isom said.

Isom said in the past, there was concern that the city of Waller and the surrounding area didn’t have enough of a workforce to support industrial growth. But Daikin’s success has proved that excellent highway access and well-positioned land can draw workers from all over Houston.

“We draw from a regional area, certainly not just our city or even our school district area,” Isom said.

The Beacon Hill master-planned development will play a pivotal role in Waller’s future growth. Houston-based developer Wolff Cos. purchased 521 acres on the north side of Highway 290 in 2018, between FM 362 and James Muse Parkway. 

Wolff Cos. sold 270 acres to residential developer Long Lake, which will build around 1,000 single-family homes in a master-planned community. The remaining 251 acres will be developed into a business park.

Wolff Cos. Chairman and President Davis Wolff said on a Bisnow webinar last month that he favored the Highway 290 corridor for development, because it is nicely sandwiched between the western and northern growth in Houston, and also has been a strong distribution route for goods. The prospect of industrial growth in the area, including Daikin’s presence, also indicates a need for more residential growth.

“That's one of the big reasons that … Wolff Cos. chose Beacon Hill, because they saw there would be constant upward pressure for residential out here, just coming from the Daikin employment and nowhere else,” Isom said.

The quality of the local school district and crucial access to utilities also influenced Wolff’s decision to develop Beacon Hill. Isom said the Waller EDC has agreed to eventually pay for 50% of the cost of extending the city of Waller’s utilities to the Beacon Hill development.

Half of that incentive will be paid when the utility infrastructure is in place, and the other half will be paid when Wolff Cos. reaches an agreement with the Texas Department of Transportation for an exit from Highway 290 into Beacon Hill, on the north side of the freeway. The total incentive will amount to about $500K, Isom said.

“We've chosen not to give a lot of direct grants to companies because we feel like it makes more sense for us to put our incentives, the same amount of money, put it into the utility infrastructure expansion, so that's there, and that benefits the city, even if the company eventually leaves the city,” Isom said.

“Most of it has generally been paying around half of the cost of utility extension, so that relieves the front cost on the developer, but it also protects the city in case the company is not here for the next 50 years.”

City of Waller Mayor Danny Marburger said that in his experience, if a business wants to move to an area, they’ll find a way, with or without extra incentives.

“We have done a little bit of abatement, but that's not very popular with our council,” Marburger said. “We're not going to stand on the corner and hand out money.”

Nickles came looking for land in northwest Houston in 2013. He ended up buying an 80-acre cornfield just outside the Waller city limits, which would eventually become the Alegacy Business Park, and a significant contributor to the local economy.

“I'm not a developer. I am a manufacturer, who was looking to build my own development, if you will,” Nickles said.

Alegacy Group is the parent company for three subsidiary companies, but the company’s main line of business, Alegacy Equipment, is focused on manufacturing gas compressors for pipelines. The equipment is extremely large and heavy, and so the roads and all related infrastructure have to be extra heavy-duty.

“Before we moved in, before we built the first building, we put in $6.5M in infrastructure, new infrastructure into the industrial park,” Nickles said.

The business park was eventually expanded to 90 acres and integrated within the city of Waller’s limits, and did a joint utility extension, connecting with Waller’s water and sewer utilities. Alegacy occupies 100K SF in the park, and two tenants have filled the 200K SF that was built on spec. The company is seeking build-to-suit tenants to develop the remaining 32 acres or so.

The city of Waller, Waller County and Waller ISD are all tax beneficiaries of the Alegacy Business Park. Nickles said that when he bought the cornfield, it was valued around $115K and the tax revenue was about $1.5K a year. Fast forward to 2019, where the site was valued well over $18M and property taxes exceeded $450K.

Nickles employed between 250 and 300 people last year, either permanent or contract staff. This year, that number is down to 120, due to the effects of the energy downturn.

“Our business has been very strong over the past five or six years, but we hit a critical speed bump the day that Saudi and Russia decided to enter a price war together and the oil markets, and that shocked all energy globally,” Nickles said.

Marburger said the energy downturn has impacted Waller, but that the city and surrounding areas have enough diversity in business to withstand it.

“If that goes haywire, it's going to hurt all the communities around, not just ours,” Marburger said. “Yes, any loss in the oil and gas industry will hurt us, but they're established enough — these are the type of companies out here that will come back.”

Nickles said he believes his business will recover from the energy downturn, even if the short term is painful. Looking ahead, he has hopes that the Beacon Hill development will end up benefiting his workforce.

“We've already had [a] conversation with the developer, that when they are ready to sell lots, which they're not there yet, that we would entertain some incentives to help some of our people move much closer to their work,” Nickles said.

The city of Waller and the surrounding area is still fairly rural. Traditionally, the area has attracted people seeking an escape from the frantic pace of a major city, and the benefits of a small-town community. The rapid industrial growth in the last decade, as well as the prospect of a new residential and business development like Beacon Hill, will change that.

“If you read the social media, there are folks who would prefer that everything just stay like it is. ‘I moved out here to be in the country and away from growth, and here it comes again,’ that kind of thing,” Isom said. “That's not so much in the city. I think we still have a good small-town feel to our city, so far, and there's not really been a lot of negativity within the city, at least, about the growth that we're seeing.”

Marburger, who has lived in the city of Waller since 1967, said there are a few people who want to keep the community small because they value the history and local culture.

“Eventually the older part of town, years from now, will go away, and a newer part will come, but you want it gradually. We don't want it just overnight and change everything up,” Marburger said.

Marburger has been mayor of Waller for the majority of the last four decades, and he is now serving his last two-year term, concluding in 2022. Though in favor of growth, Marburger said he hopes Waller continues to grow in a sustainable way, with more families and community-oriented businesses.

For Isom, the goal is to become large enough that the local economy is self-supporting. To that end, he is less concerned about the actual size of Waller and more interested in attracting quality investors and developments to the area.

“Our people who grew up here, kids who go to school here, they don't have to expect to have to go off to somewhere else in order to make a good living and have a good career, and have a good quality of life,” Isom said.

As Beacon Hill develops, and more businesses come in search of affordable land for expansion, the likelihood of that future will increase.

“It's coming, whether us old-timers want it or not, it's coming, so you have to wear a neutral hat and you can't be against growth, you've got to be for growth,” Marburger said.

“If you don't stay up with it, it'll run over you.”