Following what officials called a successful year of economic development, commercial growth is expected to continue in Pearland and Friendswood in 2016. Several projects aided in each city’s prosperous 2015, and both cities experienced another year of increased sales tax revenue, according to officials.
Sales tax revenue in Friendswood jumped by 10 percent year over year, and Pearland collected nearly $3 million more in sales tax, the fourth consecutive year of growth.
“I thought  was impressive,” Pearland Mayor Tom Reid said. “We were able to attract several of what I consider prime businesses and industries to come into Pearland. It helped us formulate the type of economic development that we’re going to be trying to focus on in the future.”
Mirroring the growth of business in the two cities, residential development also increased in 2015. Both types of development are likely to continue increasing as more residents move to the area, officials said.
“There’s definitely a correlation [between commercial and residential growth],” said Matt Buchanan, Pearland Economic Development Corporation president. “As you add rooftops, there’s going to be more commercial services needed. I think you’ve seen that over the last 15 years in Pearland. The [amount of] residential hit a critical [size], and you’ve seen a lot more retail come to our community.”
Pearland had several commercial projects permitted or announced in 2015. The developments range in uses from retail centers to medical equipment manufacturing facilities, officials said.
In total, 246 commercial permits were issued in Pearland last year valuing more than $109 million. While the city issued 13 fewer permits than in 2014, the valuation increased by about $7 million, according to the PEDC.
Some retail developments completed in 2015 helped Pearland collect a record amount of sales tax totaling more than $29 million. Costco—a 150,000-square-foot warehouse store with attached tire center and fueling station—and H&M opened in the fall in the Hwy. 288 corridor.
“It’s a great indicator of the overall economic vitality of our community to continue to see our sales tax [revenue] go up,” Buchanan said. “It just shows that we’re having more business in our community.”
In addition to providing a significant funding source for city services, one-third of sales tax in Pearland goes to the PEDC, officials said. Reid said the revenue going toward the economic development organization allows the city to get more out of its budget.
“More sales tax [revenue] is imperative to supplement the city’s general fund and allow the city to use these funds to focus on infrastructure without having to increase property taxes,” Pearland Chamber of Commerce President Carol Artz-Bucek said.
Last year, Mitsubishi Heavy Industries Compressor International opened its first North American facility in Pearland’s Lower Kirby Urban District at the intersection of Hwy. 288 and Beltway 8. Multiple other projects are expected to break ground in Lower Kirby in 2016, officials said.
The PEDC announced in December that Lonza Houston, Inc. will build a viral and cell therapy manufacturing facility in the district that is expected to be complete in 2017. Tool-Flo Manufacturing, Inc. will relocate its headquarters to a new 80,000-square-foot facility in Lower Kirby, one of multiple companies that decided to move its headquarters to the city in 2015.
“The PEDC doesn’t do a lot of retail recruitment,” Buchanan said. “We work with anybody that comes in and says they’re looking to invest in our community, but we focus more aggressively on those primary employers like Buc-ee’s and Kelsey-Seybold [Clinic].”
Friendswood City Council proclaimed 2015 as “The Year of the Business” and created a new economic development policy last January.
While the city has had goals and strategic plans in the past, it never had a formal policy, Friendswood economic development coordinator Karen Capps said. The policy—which includes six strategies to attract businesses to the city, such as targeting infrastructure and building partnerships—was adopted to ensure the economic development committee and the council were on the same page, she said.
Friendswood saw an increase in sales tax revenue in 2015 as well, officials said.
“There was a lot of [business] activity, more activity than the last few years,” Capps said. “Our sales tax [revenue] reflects that. We started off the year really strong.”
Several office centers—including Lifestyle Financial Advisors and Clearwood Business Park—in Friendswood were completed or began construction in 2015, officials said. Professional office buildings are on the city’s target market list along with restaurants and certain types of retail. The city aims for these fields because they are compatible with Friendswood’s high percentage of residential property, Capps said.
Friendswood City Council approved Clear Creek Community Church’s planned development in July on 135 acres along FM 528. In addition to a church campus, the plan includes land zoned for commercial use.
The increased commercial development and sales tax revenue is important to reduce the tax burden on city homeowners, officials said. The importance of the growth is amplified with a tax-base revenue breakdown of about 90 percent residential and 10 percent commercial in Friendswood, Capps said.
“Besides providing shopping and dining opportunities close to home, it’s convenience as well,” she said. “Most people would rather spend their money in their town.”