NewQuest’s long-awaited $400 million Texas Heritage Marketplace mixed-use project could be a “monster sales tax driver” for the city of Katy, City Administrator Byron Hebert said.

City officials said the 165-acre project has been in the works for nearly a decade.

According to a Jan. 27 news release from NewQuest, Texas Heritage Marketplace is projected to house:

• 750,000 square feet of retail and restaurants
• 300,000 square feet of medical offices
• 550 apartments

Target is confirmed as an anchor tenant, bringing a 149,000-square-foot store, per the release.

Although the development—located at the southeast corner of I-10 and Texas Heritage Parkway—is outside of Katy’s city limits, it’s within the city’s extraterritorial jurisdiction. This means Katy is expected to receive roughly $3 million in sales tax revenue annually from the property, city officials said.

The city's annual sales tax revenue has risen 61.07%, roughly $8 million, citywide from 2020-24, according to the Texas Comptroller's office.

Hebert said the amount of master-planned communities and subdivisions south of the development, such as Jordan Ranch, made the location attractive for NewQuest.

The 6.5-mile Texas Heritage Parkway between I-10 and FM 1093 also links the development to a 5-mile trade area, whose population has grown 56% since 2020, per the release.

“All the subdivisions south, ... they’re going to run up to Texas Heritage Marketplace,” Hebert said.The breakdown

Through an incentive agreement between the Willow Creek Farms Municipal Utility District and NewQuest, the city is set to receive $0.01 in sales tax revenue for every dollar spent in sales tax in the development, Hebert said. Other factors of the agreement require:

• Katy to reimburse NewQuest $20 million for detention and a road south of the project, upon NewQuest hitting retail milestones
• The MUD to give NewQuest $20 million from sales tax revenue it collects from the development

Katy’s cost will come from Metropolitan Transit Authority of Harris County funds, Hebert said.

“By strengthening our sales tax base, it gives us the ability to finance long-term maintenance of our infrastructure without having to rely solely or heavily on property taxes,” City Planner Rachel Lazo said.The details

Mobility projects are also planned around the development. A stretch of I-10 near the site will be part of a $320 million expansion beginning in late 2026 that will widen it to 10 lanes, a Texas Department of Transportation spokesperson said.

The average daily traffic count on I-10 adjacent to the Texas Heritage Marketplace site rose 8.8% from 2019-23, according to TxDOT data.“Like any transportation project, the I-10 expansion may present temporary challenges, but its long-term infrastructure improvements will drive significant economic growth for Katy,” Angie Thomason, president and CEO of the Katy Area Economic Development Council, said in an email.

Additionally, the city’s Pederson Road project that feeds into Texas Heritage Parkway will cost $3.3 million and add a lane to the road in July.

“[These] types of developments ... will prevent people from having to go down I-10 and deal with the traffic and the congestion of the existing developments,” Katy Community Development Director Ian Clowes said.

Looking ahead

NewQuest didn’t respond to multiple interview requests about Texas Heritage Marketplace. However, according to a brochure on its website, preleasing has begun with a proposed delivery date of its first buildings in the second quarter of 2026.

Hebert said the city has been anticipating I-10’s expansion, and he believes the space between Hwy. 90 and I-10 is the future of Katy’s growth.

“I think the citizens of Katy are definitely going to be pleased with the products that are coming, but I think people in the region are going to be just as satisfied,” he said.

Kelly Schafler contributed to this report.