Updated Jan. 25 at 4:35 p.m.

The graphic accompanying this story has been updated to reflect Q3 2015 downtown sales tax numbers. Note: sales tax figures for all of 2015 are not yet available. 

In the past five years the value of properties in downtown San Marcos has increased 38 percent, from $104 million in 2011 to $144 million in 2015, according to city statistics. Officials said they expect that upward trend to continue through 2016.

Officials said the city’s population influx, public investment in downtown infrastructure and a growing interest in residential space downtown are driving development in the area.

When Main Street Program Manager Samantha Armbruster started her job promoting events and small businesses in downtown San Marcos in 2013, she said her office received about one call per month from entrepreneurs or developers looking to invest downtown.

“[The calls are] almost daily at this point,” she said. “The interest level has just skyrocketed.”

Downtown San Marcos added 139 net new jobs in 2015, according to city statistics. That outpaced 2013 and 2014, which added 126 and 86 net new jobs, respectively. New business starts, however, were down slightly from previous years. According to the city of San Marcos, in 2013 and 2014, 25 and 27 new downtown businesses opened, respectively. In 2015, 22 new businesses opened downtown.

Retail growth

Armbruster said the biggest trend she saw downtown in 2015 was the growth of dining options. Torchy’s Tacos, the Root Cellar Bakery, Pieology, Jersey Mike’s Subs and a smattering of food trailers all opened downtown in the past year.

In her experience studying other cities’ downtowns, restaurant growth typically leads to growth of other retail, she said.

“The restaurant [industry] is a good catalyst for unique and successful retail,” she said. “So as we see more of these restaurants becoming a trend, that’s really exciting news for our retail.” [polldaddy poll=9279878]

The biggest change coming to downtown San Marcos in 2016 could be at the former Justice Center at Martin Luther King Jr. Drive and Guadalupe Street. Mark Shields, a principal with Primus Real Estate, purchased the building in 2012 and plans to redevelop it as Crossroads Center. The development will include restaurants, retail and 9,000 square feet of office space.

Shields said San Marcos’ three-year run as the fastest-growing city in the nation, which began in 2012, has raised the city’s profile. When the former post office at 312 N. Guadalupe St. was redeveloped in early 2015 and attracted Torchy’s Tacos, other businesses took notice, he said.

“Now [San Marcos] is on the map,” Shields said. “You get a little town and you say, ‘Torchy’s Tacos’—that doesn’t sound like much, but all of a sudden the rest of the retailers are like, ‘Wow, they went there.’”

He said he hopes to begin meeting with the city’s planning department to discuss Crossroads Center early in 2016.

At home downtown

In early January work began on a seven-story, mixed-use building on the 200 block of Edward Gary Street in downtown San Marcos.

The development, called The Local, will include retail on a two-story first floor and five floors of residential above that. In addition to 304 bedrooms—including a mix of studio, one-, two- and four-bedroom units—The Local will feature 6,000 square feet of retail, internal bike storage, an elevated pool deck as well as a clubhouse, fitness center, saunas and a study lounge.

Project developer John David Carson said in an email he hopes to have the project open by mid-2017.

Carson said he hopes “projects like The Local will bring density to appropriate areas to mitigate sprawl, support investment in transit and reduce traffic and parking pressures by allowing people to live very near school, employment, services and recreation.”

The Local continues a trend of growing residential density in and around downtown San Marcos. Since 2012 the city has added 267 residential units downtown, an increase of more than
60 percent, according to city statistics.

Another developer is planning a 95-unit project, known as The Pointe, at 417 and 425 Comanche St.

A developer is also planning to build residential units at the former site of Tuttle Lumber at 228 S. Guadalupe St.

The city’s comprehensive master plan and downtown master plan each call for residential density downtown.

Scott Gregson, a San Marcos City Council member, moved downtown in 2006.

“If you take [existing and planned downtown residential developments], that’s the size of a pretty nice small town, just within this downtown space,” Gregson said.

Shields is also planning to build what he calls “micro-lofts” at the former Hays County Annex Building, 102 N. LBJ Drive. The three-story building is initially planned to feature a restaurant on the first floor and 12 units, each measuring about 500 square feet, on the top two floors.

Unlike many other residential projects taking shape downtown, Shields’ units will not be leased on a rent-by-the-bedroom basis, a practice that typically indicates a development is geared to university students.

Downtown improvements

In 2012 the city began the first phase of a major reconstruction that improved downtown streets, sidewalks, utilities and other infrastructure.

In late 2015 the city completed the $12 million improvement project, which included Hutchison and Guadalupe streets as well as LBJ and University drives. The city has also budgeted about $14 million for Phase 2 of improvements to streets, sidewalks, drainage and utilities in an as-yet undecided six-block area of downtown. Design of the improvements will begin in 2017.

Laurie Moyer, director of engineering and capital improvements for the city, said the areas of downtown that start to see private investment next will likely drive the location of the Phase 2 improvements.

“The first phase has really helped to jump-start some stuff, and now we’re looking to see what’s coming in, where the growth is happening, what’s the big next step that would really help,” she said.

In 2014, council directed staff to move forward with plans to convert Guadalupe and LBJ, which are one-way through most of downtown, to two-way traffic.

The move was recommended in the city’s downtown master plan, which was adopted in 2008. The consultants who assisted the city with the plan indicated the conversion to two-way traffic could slow down traffic, improve connectivity and foster economic development in areas that were formerly one-way.

If the city moves forward with conversion to two-way traffic, adjustments would need to be made to traffic signals, railroad crossings and striping on streets, Moyer said.

The city is also collecting feedback on back-in parking, which is in place in some parts of downtown. Moyer said the general sentiment the city has gotten from downtown business owners is that back-in parking is problematic for their businesses.

“Some businesses, while the owner may like [back-in parking], they have heard people complain about it, but it seems like right now it’s more anti-back-in than pro,” Moyer said.