With the grand opening of Sprouts Farmers Market and the news that TJ Maxx and Nordstrom Rack are coming soon, it feels like major retailers are finally putting their faith in the Waco market.
For years, Waco has heard some version of the same question from national brands: Is the market big enough? Increasingly, the answer seems to be yes.
But behind those new storefronts is a much bigger story about how Waco has worked to convince businesses that the city is ready for them — and, perhaps more importantly, how city leaders are deciding which businesses Waco is ready for.
The answer involves data and demographics, infrastructure and incentives, workforce development and, sometimes, simply getting skeptical corporate executives to come to Waco and see the city for themselves.
“We’re a mid-size city in Texas, but we’re also a regional hub,” said Waco City Manager Ryan Holt. “We want to be a big city, but we also want to be Waco.”
That balance is at the heart of Waco’s economic development strategy. The goal isn’t simply to make the city bigger. It is to build a stronger, more diverse economy while protecting the qualities that make people want to live here in the first place.
Proof of Concept
For national retailers, the decision to enter a new market is rarely based on whether a community simply wants them. Companies have formulas: They look at population, household income, disposable income, traffic patterns and the number of people living within a certain radius. As communities grow, they reach certain triggers that tell national brands a market may finally support another location.
Waco is beginning to hit more of those triggers, Holt said. The city’s position along Interstate 35 is a significant part of the equation. As Dallas and Austin continue to grow, development is moving toward Waco, putting the city in the middle of one of Texas’ most important economic corridors. But population is only part of Waco’s story.
Jeremy Pesina, interim director of economic development for Waco, said the city’s trade area is considerably larger than its population of roughly 145,000. Central Texas Marketplace draws more than 7 million visits a year, while the HEB at South Valley Mills and Target have 5 million and 4 million visits respectively.
Those numbers demonstrate something national retailers care deeply about: People are already coming to Waco to spend money.
“We know that people are coming here to shop, play and eat,” Pesina said. “We’re tracking it all.”
That gives Waco something it didn’t necessarily have years ago: Proof of concept.
Cinemark, which opened during the COVID-19 pandemic, quickly became one of the company’s top locations for visitation. Main Event also ranked among its company’s top-performing locations, according to Pesina, while Topgolf has been so successful that company officials ultimately wished they had built a larger facility.
Those businesses did more than provide Waco residents with new entertainment options. They became evidence that national brands can succeed here.
“Cinemark rang the bell for other brands on that caliber that you can come to Waco and succeed,” Pesina said. “Once you get a major brand to come and test it out and be successful, it tells all the other brands. Sprouts and Natural Grocers came without incentives; we didn’t have to mitigate their risk. They came knowing they were going to succeed.”
Changing the Perception
Convincing a company that Waco is a viable market is not always as simple as sending a spreadsheet. Sometimes the first obstacle is perception.
Pesina said some executives considering Waco have never actually been here and that their understanding of the city may be based on its population or its location between Dallas and Austin, rather than on what Waco has to offer. So the economic development team brings them here.
“When we get them on the ground,” Pesina said, “it changes their perception. They realize Waco is not as small as they thought it was. When they experience downtown, see Cameron Park and all the culture and life, it makes a big difference.”
Holt points to the concentration of attractions as one of Waco’s under-appreciated advantages. On a recent visit to Knoxville, Tennessee, his team found that while Knoxville has a river, a revitalized downtown and a major university presence, Waco has a surprisingly concentrated collection of attractions of its own.
That matters to economic development because quality of life matters to employers. A company doesn’t just need a building. It needs employees who are willing to work there, and increasingly it needs to convince those employees that Waco is somewhere they want to live, he said.
Pesina added that Waco’s lower cost of living, parks, trails and central location can all become part of that conversation.
“We’re about 90 minutes from 80% of the population of Texas,” he said.
For a company comparing the cost of operating in Dallas or Austin with the cost of operating in Waco, that combination of accessibility and affordability can be significant.
But Waco’s economic development officials aren’t pretending the city competes on the same scale as Dallas or Austin. Instead, they are making a different argument: Waco is large enough to have the infrastructure, workforce and customer base companies need, while still being small enough to offer lower costs and a different quality of life.
“We’re the smallest kid on the varsity team,” Holt said, borrowing a phrase former Mayor Dillon Meek has used to describe Waco’s position. “Or as District 1 Councilwoman Andrea Barefield likes to say, ‘We punch above our weight.’”
That mindset has led Waco officials to study other cities facing similar circumstances, Holt said. College Station is a natural comparison, as are San Marcos and communities on the edges of larger metropolitan areas. Waco’s challenge is somewhat different, however, because it isn’t simply a suburb of Dallas or Austin.
So the city has had to deliberately build the ecosystem that makes economic growth possible, Holt said. Workforce development is one part of that ecosystem. The WorkSITE Development Center, a partnership among the city, McLennan County and Texas State Technical College, helps prepare workers for the needs of employers. Holt describes TSTC as a “gem” among technical schools and McLennan Community College as another important asset.
Baylor’s emergence as a Tier One research institution adds another piece, giving Waco a university with increasing research and workforce connections, he added.
The result is an economic development strategy that isn’t based on one selling point.
“We have been intentional about creating an ecosystem that makes Waco a really attractive place to do business,” Holt said. “Those before us get a lot of credit, and we’re just trying to continue that good work.”
Calculating Growth
That ecosystem is also attracting companies that have little to do with traditional retail.
Seven German companies, Holt said, have chosen Waco for U.S. operations. Two Mexican companies, Vasa and Electrolit, have recently selected the area as well, while the Greater Waco Chamber continues international recruiting efforts.
“An Asian company is looking Waco for a U.S. headquarters,” he said. “M&M Mars operates one of its largest plants in the world here and is expanding its footprint. GPI made a $1.6 billion investment in Waco, duplicating its Michigan operation, and location was a major factor.”
And the growth of the semiconductor industry around Taylor could create another layer of opportunity. As major manufacturers establish operations there, suppliers and companies producing components and subcomponents may begin looking for locations within easy reach.
“Waco has the things those companies need,” Holt said. “Interstate access, rail, trucking routes, natural gas, electricity, high-voltage lines and water. Our forefathers have ensured that Waco has water for the next 100 years.”
But growth isn’t free. In fact, one of the most important parts of Waco’s economic development strategy may be knowing when to say no, Holt said.
“We have about $1 billion in current needs for water for the things we have on the ground today,” he said. “Another $1 billion for wastewater and another $1 billion for streets — a total of about $3 billion in infrastructure needs.”
That makes every new project a financial calculation.
“So before we go extending infrastructure to meet the needs — whether it’s retail or commercial or industrial — we look at what is the return on investment for the community,” Holt said. “And we do say ‘no.’”
If a company needs a road extended, a water line installed or wastewater capacity expanded, city officials have to consider what the investment will bring back to the community. They look at property taxes, sales taxes and other revenue, as well as the long-term cost of providing services.
“We’re not just growing for the sake of growth,” Holt said. “Because it has to pay for itself.”
That philosophy also explains why incentives are not simply handed out to every company that expresses interest. There is also an effort to protect the people and businesses already here.
“We have to protect our current customers,” Holt said, explaining that the city has to consider the impact of new development on existing water, wastewater and tax rates.
Supporting Waco
Few current economic development questions demonstrate that balancing act better than data centers. Holt said Waco is neither automatically for nor against them. Instead, the city evaluates a data center just as it would evaluate any other business.
“What are the resources involved?” he said. “Is it a positive for the community? Technology is moving very quickly around data centers. But data centers, for us, are just another business. We’re going to do the evaluation and whatever the investment the City of Waco provides, whether it’s land, some tax incentive, water or wastewater — remember, we’ve ensured we have water for 100 years — we’re not going to do something to jeopardize that.”
Technology is also changing the equation. Newer facilities can use closed-loop water systems and other technologies that alter their resource requirements.
“There’s not a one-size-fits-all data center,” Holt said.
Ultimately, he said, there are simply some locations where a particular data center makes sense and others where it doesn’t. The question isn’t whether a particular type of business is inherently good or bad for Waco. The question is whether a particular project, in a particular location, makes sense for Waco.
“There are places that they would fit in and places they wouldn’t fit in,” he said. “Our council’s going to hold us accountable to make sure the decisions we make support Waco and keep the flavor of Waco — the whole reason why people want to live here. So we are neither pro or against data centers.”
Turning a Headache into a Strategy
One giant infrastructure project that cannot be ignored is Interstate 35. The construction is transforming the city’s major north-south corridor — but completion feels illusive with an end date of 2029.
Holt doesn’t believe the construction is scaring away national brands. Much of the project is controlled by TxDOT rather than the city, and Waco has limited ability to control the construction schedule. Instead, city officials are trying to make the future improvements part of their recruiting strategy.
Pesina said the city is working to position development along I-35 and Highway 6 so businesses arriving in Waco can benefit from the improved infrastructure once the work is complete. The idea is to think beyond today’s traffic patterns and sell companies on what the corridor will look like when the work is finished.
“We are trying to utilize that to help incentivize new development to move faster,” Pesina said. “We can tell companies, ‘Hey, they will be complete by this day. So if you start building now, you’ll get the improved road and the improved flow.’ Our traffic numbers are great on I-35 so the construction is not a disadvantage.”
Two years sounds like a long way away, but Holt pointed out that most construction projects take at least that long.
Meeting the Formulas
For all of Waco’s recent success, some retailers still aren’t convinced the market meets their formulas. The one that hurts the most: Trader Joe’s.
Pesina says the company told Waco officials that it looks for roughly 300,000 to 400,000 people within a one- to two-mile radius, along with a relatively high-income customer base. Waco has a large regional trade area, but it doesn’t have that kind of immediate population density.
“Every brand has their model,” Pesina said.
So the city’s economic development team continues to send information and potential sites. Waco’s job is to understand that model and determine whether the market is getting close enough to make the conversation worthwhile. That process can take years.
TJ Maxx is an example. Pesina said. Waco officials spent roughly four years contacting the company, sending sites and providing information. Then, unexpectedly, the retailer showed up and told officials it was preparing to pull permits. That kind of development work rarely makes headlines until the final announcement.
As for Trader Joe’s:
“We’re certainly in the ballpark,” Holt said. “And getting closer every single day. There are other national brands that Jeremy talks to weekly, and you will likely see those dominoes start to fall.”
Part of the Community
It would be easy to measure Waco’s economic development success by counting national brands. But Holt said that’s only part of the equation. Waco also wants local businesses to thrive.
“We want to be a big city, but we also want to be Waco,” he said.
That means making room for the local businesses that give the city its personality alongside the national retailers that bring new choices and additional sales-tax revenue.
“If you walk out the front door of City Hall, to your left, you’ve got Cricket’s, The Olive Branch, The Clay Pot and Barnett’s,” Holt said. “If you walk down Austin Avenue, you have Jake’s Texas Tea House, the new bakery [Un je ne sais Quoi…] there, Dichotomy. Those are all local brands that people support every day and keep them in business.”
Food truck operators are moving into brick-and-mortar locations, he said. Entrepreneurs are creating new concepts. Some of the most interesting growth may not come with a nationally recognizable name on the front of the building.
“Waco embraces unique concepts,” Holt said, “and we want them to thrive as well because they’re a vital part of our community.”
At the same time, Waco residents are telling city officials what they would like to see.
Pesina says the economic development team has compiled a community “word cloud” based on the businesses residents frequently request. Trader Joe’s has the top spot on the list but Cheesecake Factory, Razzoo’s and Lululemon are among the other names that have come up.
People who live in Waco remain a big part of the equation through the elected officials who ultimately make decisions about the city’s future. That may be the most important distinction in Waco’s approach to growth. For all the data, demographics and economic forecasts involved in recruiting a company, Holt said the ultimate consideration is remarkably simple: What does the community want?
“We manage our relationship with our community,” he said. “And so our community will dictate to us what comes here.”
