H-E-B plans for future growth

Texas-based grocer H-E-B has purchased two land tracts with plans to construct and open its first Magnolia location within the next two to three years. The new location will become the first big-box grocery store within city limits.

H-E-B is the first tenant to purchase property at the future 142-acre Magnolia Commons mixed-use center that will be developed by Austin-based Stratus Properties Inc., development partner Jon Andrus said. H-E-B purchased about 18 acres in September at the newly annexed site, which is located at FM 149 and FM 1488 across from Magnolia High School, Andrus said. Stratus Properties confirmed the sale of the land to H-E-B last month.

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

In addition, H-E-B purchased about 15 acres in the Westwood Magnolia Parkway Improvement District on a yet-to-be-developed 40-acre tract at FM 1488 and Tamina Road in early spring, WMPID board member Tom Grayson said.

“I don’t know if they haven’t just bought that [land] for an investment,” Grayson said. “I would imagine, just looking at what they’re doing, they seem to have [bought land at] all the major thoroughfares with room for a store about every 5 to 6 miles. It’s pretty consistent.”

Cyndy Garza-Roberts, H-E-B public affairs director for the Houston region, confirmed the company purchased acreage at FM 149 and FM 1488 but declined to confirm whether officials bought land at FM 1488 and Tamina Road to construct a future store.

More options, competition

Aside from national chains in the area, such as Walgreens and Target Corp., which offer limited grocery selections, there are only two other grocery store options in Magnolia—Arlan’s Market and Brookshire Brothers.

“There are still plenty of items that people in the city of Magnolia are having to go to The Woodlands or Tomball for, and anytime we can eliminate the need to drive that distance, we prefer it,” Magnolia Mayor Todd Kana said. “I believe it’ll naturally attract other businesses around [the store], which in turn will increase our sales tax as well, which is ultimately our goal. [Our goal is] to gain sales tax along with convenience for our people.”

H-E-B has been scouting the Magnolia area for a possible location since as early as last May, Garza-Roberts said. Though Andrus anticipates portions of Magnolia Commons to open within the next two to three years, Garza-Roberts said H-E-B has not yet identified a construction timeline for a potential Magnolia store.

“We’re always looking for opportunities for growth and areas that we can best serve additional customers, and [Magnolia is] an area that certainly is growing,” Garza-Roberts said.

Even with a future Magnolia H-E-B location in the works, Kana said he does not believe shoppers will completely abandon the other long-standing, smaller-scale stores.

“I think [Arlan’s Market and Brookshire Brothers] will still serve a market and a purpose within the city as well,” Kana said. “I’m not looking for someone to get the short straw, but I do like the opportunity, and competition is healthy in capitalism.”

Sales tax revenue

A major concern for Magnolia in the coming years will be sales tax revenue, which was a key factor in deciding last June to annex the 163-acre land tract where the future Magnolia Commons mixed-use center is planned for development, Kana said.

Though the center is likely to attract other new businesses in addition to H-E-B, the city will not receive the full 2 cents of sales tax revenue from future on-site development as it originally anticipated, he said.

Last May, voters approved a proposition to grant 1 cent of sales tax revenue from any future areas annexed into city limits to the Magnolia Volunteer Fire Department. Because the annexation of the future Magnolia Commons land tract was finalized after last year’s election, the sales tax revenue from the now-vacant area will be split between the city of Magnolia and MVFD when the center become operational.

“We’re excited to have [a potential H-E-B, but] it was frustrating because all of our planning is based on sales tax, and it greatly affects what we anticipated [receiving] from a development such as that versus what we would now get after the proposition,” Kana said.

Since work to annex the land into city limits had already begun prior to the approval of the sales tax proposition, Kana said it should not be included as an area where the revenue is split between the city and Montgomery County Emergency Services District No. 10 for MVFD.

“I understand why [MVFD] did it,” Kana said. “What I don’t understand is why they’re resistant to letting us have that area back. It’s not like we’re asking them to rebate that [additional revenue] every time we [expand]. Our plans were already in the process.”

Prior to the passage of the proposition, Kana said he estimates the city could have received about $500,000 in sales tax revenue per year based on projections for an H-E-B store alone.

Additional reporting by Liza Winkler