Local, national businesses flourish amid Kyle expansion
Kyle’s recent growth has attracted a slew of new businesses to the 3.5 million square feet of developed and developing retail space within the city.
Upcoming development includes a Walmart Super Store and a second Walgreens next to a soon-to-be constructed Sonic restaurant at the corner of FM 150 and FM 2770. IHOP and Applebee’s were also approved by the Planning and Zoning Commission at a hearing in January.
The Walmart, IHOP and Applebee’s projects do not have timetables yet, but Walgreens is expected to open by September, and Sonic will follow in December.
Diana Blank, director of economic development for the City of Kyle, said that in the past, when she tried to explain the city’s growth, she ran into some understandably skeptical businesses.
“A growth rate of 427 percent over the last decade sounds pretty unreasonable, so until we got the census [data] to back it up, I sounded like a used-car salesman,” Blank said.
That growth prompted a partnership with Catalyst, an Austin-based market research company. After a few months, Catalyst returned with the numbers and statistics Blank and her team needed to woo companies like Wal-Mart Store Inc. and Rack Room Shoes. The initial contract, which has been renewed to run through the end of the fiscal year, was half-funded by the private sector.
“We need to add these assets and amenities to be available to our community so that if they need to go to the grocery store or need to buy a pair of shoes, they don’t have to go somewhere else,” Blank said.
Strategic development plan
Catalyst’s study showed that Kyle was experiencing $533,678,304 of annual “retail leakage.” The term refers to a measure of retail sales a community loses to a competing market.
High retail leakages typically are indicative of areas ripe for retail development. As more shoppers moved to Kyle, more people needed clothes, food or electronics, and they would venture to Austin, San Marcos and other economies.
The new developments have been a long time coming, Blank said. As of 2011, Kyle had 1.2 million square feet of retail space, with a vacancy rate of 4 percent.
That compared favorably to Austin’s 10.5 percent vacancy rate, but there were not many large retailers in the city. This hole in the economy spurred the city to create a strategic development plan in 2007 with the goal of transforming Kyle into a retail destination.
The plan hinged on an education program aimed at two groups: potential retailers and Kyle residents.
Blank said the city focused on proving to retailers that Kyle’s population could support large businesses and on educating the public about how to attract those retailers. The bottom line, she said, was to support the businesses that are already in town.
She said the community responded to the prompt with Texas-sized support.
“It’s funny,” Blank said. “When a new business opens, we tell them, ‘You need to prepare to be overwhelmed.’ And they say, ‘Oh, that’s awesome,’ and we say, ‘No, you don’t understand. Prepare to be overwhelmed.’ We’ve had several restaurants open and on their first day, they run out of food. People were lining up at 4:30 in the morning to get groceries from H-E-B.”
Ray Hernandez, executive director of the Kyle Chamber of Commerce, said he expects the development to have another effect.
“I think the larger businesses that have come up and the large development has actually assisted some of the smaller shops here in our area,” Hernandez said.
Kyle’s locally owned businesses might be assumed to be at risk, but Spencer Thomas, co-owner of the Texas Pie Company, said that between orders from individuals and new companies in the area, business is booming.
“Kyle wasn’t what it is now,” Thomas said. “We opened up having some wholesale clients in Austin that we would bake for, but before we knew it, our walk-in sales were greater than our established wholesale sales.”
Claudia McCormack operates Cake Dreams, a custom cake shop across the street from City Hall, where Blank and administrative assistant Victoria Vargas work to bring more big names to the city.
McCormack said she shares Thomas’ outlook and said that since the end of 2011, she has been so busy she is considering hiring a part-time staffer. McCormack said she isn’t worried about the possible competition from a company like Wal-Mart.
“I make everything from scratch. I don’t freeze my cakes, so the taste is totally different,” she said. “It’s a totally different product.”
Benefits of development
The potential benefits of this retail growth include higher sales tax collections and job creation.
When Walmart opens, Blank said the city expects it to bring in about $1 million annually in sales tax, nearly equal to the city’s total sales tax revenue from 2005.
In 2011, Kyle collected about $3 million. The other retail additions are expected to add another $3 million, which means the city could collect around $7 million annually.