Austin-based development company Stratus Properties Inc. officials confirmed big-box grocer H-E-B purchased 18 acres in September to construct its first Magnolia location at the corner of FM 149 and FM 1488.

H-E-B is the first tenant to purchase property at the proposed 142-acre mixed-use center—known as Magnolia Commons—expected to begin construction within the next two to three years, said Jon Andrus, Stratus Properties Inc. development partner.

“H-E-B [officials] own their tract—they closed on the land with us,” Andrus said. “They own their land, and that’s about as much that has been finalized.”

‪Cyndy Garza-Roberts, H-E-B public affairs director for the Houston region, said the company has displayed an interest in doing business with the Magnolia community for nearly a year. Garza-Roberts said the H-E-B real estate team was in the early stages of searching for a possible Magnolia location last May.

“As the Magnolia community continues to grow, that’s certainly an area we are exploring,” Garza-Roberts said last fall.

Last June the city of Magnolia annexed the 163-acre 306 Montgomery Limited tract located across from Magnolia High School. The tract is often referred to as the “Golden Triangle” due to the area’s prime location for future development, Magnolia City Administrator Paul Mendes said.

After working with the city of Magnolia for about a year, Stratus Properties Inc. purchased the Montgomery Limited tract in September to develop Magnolia Commons on 142 acres, Andrus said. The development company donated the remaining 21 acres of right of way to the Texas Department of Transportation to help construct the overpass at FM 1488 and FM 149, which is scheduled for completion in early 2017, he said.

Andrus said he plans to develop the first 75 acres of the property with 400,000-square-feet of retail and restaurant space with a possible home improvement store, movie theater and 12 pad sites. In its early stages, it is difficult to estimate the amount of sales tax the city of Magnolia and the Magnolia Volunteer Fire Department could receive from the new development, he said.

Early plans for the property indicate 45 to 50 acres on the back section of the property will feature up to 1,200 multifamily or townhome units, Andrus said. An additional estimated 20 acres will be used for drainage ponds, he said.

“I know the city officials are super excited about [the project]. They’ve had that residential growth, and that’s usually what happens when you have that residential growth is [that] us commercial developers tend to follow.” —Jon Andrus, Stratus Properties Inc. development partner

“I know the city officials are super excited about [the project],” Andrus said. “They’ve had that residential growth, and that’s usually what happens when you have that residential growth is [that] us commercial developers tend to follow.”

However, future development of the vacant 142-acre site is contingent upon the extension of water and sewer lines to the property, Andrus said. The city was originally expected to begin construction to extend utilities to the property in March, Mendes said. After delays in easement acquisition, Andrus said the city now plans to begin extending the utilities in June and complete the project in early to mid-2016.

“In the next six to nine months, we’ll have a pretty good feel for the progress of the road [construction] and utilities and really start to market the project,” Andrus said.

Andrus, who is an Austin resident, said he became interested in purchasing the land tract for development in Magnolia after traveling down FM 1488 for the past five years to visit his daughter who lives in The Woodlands.

“[FM] 1488 is a really powerful road that connects [Hwy.] 290 to I-45, and it’s tremendous,” Andrus said. “We saw a real opportunity there to bring that kind of retail [development] to the [Magnolia] market.”

Stratus Properties Inc. has developed a number of other mixed-use properties in the Austin and Dallas areas.