9/6/2017 Baluarte Bridge Heightens Role of Agriculture In RGV Industrial Sector | REBusinessOnline

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Baluarte Bridge Heightens Role ofAgriculture In RGV Industrial Sector

ScanTech Sciences Inc.'s cold pasteurization facility in Mission,built by Ci Logistics Co., will treat produce travling between Mexico

and the U.S.

The need for storage and distribution space for the variety of fruitsand vegetables imported from Mexico has long been a driver ofindustrial demand in the Rio Grande Valley (RGV). Overallindustrial occupancy is on the rise throughout the region — about92 percent in the Greater McAllen Area — and the role ofagriculture is becoming a major part of it.

The agriculture industry has fueled rapid growth in the RGV city ofPharr and continues to bolster its economic prosperity today. As a

POSTED ON SEPTEMBER 1, 2017 BY TAYLOR WILLIAMS IN INDUSTRIAL,MARKET REPORTS, TEXAS, TEXAS MARKET REPORTS

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9/6/2017 Baluarte Bridge Heightens Role of Agriculture In RGV Industrial Sector | REBusinessOnline

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Michael Blum, NAIRio Grande Valley

global agricultural powerhouse, Pharr is home to a variety ofthriving businesses in the agriculture industry. The Pharr-ReynosaInternational Bridge represents the sixth-largest land (in the UnitedStates and currently processes more than $30 billion ininternational trade on an annual basis.

The most influential element behind thisuptick has not been agrarian, financial ordemographic, but rather infrastructuraland on the Mexico side of the region.

The Baluarte Bicentennial Bridge, a3,700-foot cable-stayed bridge completedin late 2013, provides direct access fromthe Pacific coast city of Mazatlan to theinland metro area of Durango. FromDurango, product can be transporteddirectly to the Mexico border city ofReynosa, which has a thriving industrial sector as the “last mile” ofdistribution before the product enters the U.S.

Construction of the bridge has shortened by four to six hours thetravel time for produce en route to Reynosa, shaving $500 to$1,500 off of truck transportation costs per load. Consequently,more overall product is coming in, driving up demand forwarehouse and distribution centers in Pharr and surroundingcommunities.

Along with Nogales, Ariz., Pharr is the largest American port ofentry (POE) for Mexican produce. In 2015, 11,760 produce-ladentruckloads came through Nogales compared to 10,988 for Pharr, adifference of 772 truckloads. In 2016, the difference between thetwo cities shrunk to 480 truckloads as the viability of the bridgebecame more widely recognized.

The volume of truckloads coming through all RGV POEs increasedby 7.4 percent between 2015 and 2016. Though we’re only halfwayinto 2017, a similar rate of year-over-year increase is expected,with much credit being owed to the construction of the BaluarteBridge.

Competition Heats Up

According to Floyd Adcock, a research fellow at Texas A&M,Nagoles and Pharr alternate as market leaders in the importation ofMexican produce.

“Nogales is about to enter five to six months of really low volume,while Pharr will pretty much maintain activity similar to its first fivemonths,” says Adcock. “Nogales is king for about six months whilePharr is king for the other six months, so it depends on who has thebest performance during their respective reigns.”

A new venture in McAllen may have a huge impact on thesenumbers. ScanTech Sciences Inc. has started construction of thefirst electronic cold-pasteurization (ECP) food treatment center inMcAllen, which will treat produce travelling to and from the US andMexico. A 100,000-square-foot facility is scheduled to open during

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the fourth quarter of 2017 and be fully operational by the firstquarter of 2018.

In addition, more than 500,000 square feet of warehouse facilitiesare in some stage of development within the McAllen MSA, drivenby logistics requirements of 230 Maquilas in the Reynosa area andby increasing agricultural imports.

Another factor driving growth is legislation regarding overweighttrucks that was passed two years ago. Overweight trucks fromMexico can now come across the Pharr-Reynosa InternationalBridge and use designated routes to reach their intendedwarehouse destinations in Pharr, McAllen and Mission.

Mexico offers greater weight limits for trucks than Texas does. InMexico, cargo can weigh as much as 125,000 pounds; in Texas,the limit is 80,000 pounds. Under House Bill 474, Mexican truckerscrossing at Pharr no longer have to unload one-third of their cargoin Reynosa, but can instead roll on through to RGV warehouses.

Room for Growth

The Pharr Produce District, a 300-acre area that serves as thecenter of activity for produce storage and distribution, allows forrapid inspection of all produce entering or exiting the United States.Opportunities for industries that complement Pharr’s ProduceDistrict are numerous. Whether you’re a grower, broker, distributoror an owner of a refrigerated shipping company, there is plenty ofroom for expansion and growth in every aspect of this market.

— By Michael Blum, partner/managing broker, NAI Rio GrandeValley. This article first appeared in the August 2017 issue of TexasReal Estate Business magazine. 

Tagged Industrial, Texas

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