Key facts about one of the fastest growing regions in the U.S.A.
The Rio Grande Valley – or RGV – is located on the southernmost tip of Texas, right on the U.S.-Mexican border. The 43,000 square mile Valley is bordered by the Rio Grande River and Mexico to the west and south and the Gulf of Mexico to the east. Some of the largest U.S. cities in this region include McAllen, Harlingen, and Brownsville.
Regional, national, and international businesses are locating and expanding throughout the Valley. Key indicators of growth in the Rio Grande Valley include:
- Increasing population
- Trained and skilled workforce
- Creation of new jobs
- New commercial and residential construction
- Investment for public and private infrastructure
- Affordable cost of doing business
- Low cost of living and attractive lifestyle for residents
The Land
The Lower Rio Grande Valley of Texas defines the easternmost geographic point of the border between the United States and Mexico.
Starr, Cameron, Hidalgo, and Willacy counties make up the lower Rio Grande region, extending about 100 miles upriver from the Gulf of Mexico. McAllen, Brownsville and Harlingen combine to form the northern portion of the RGV. This metropolitan triangle is ranked the 4th fastest growing area in the United States.
Just a few minutes away from McAllen is the Mexico border town of Reynosa, one of the three fastest-growing cities in Mexico for over ten consecutive years. The border cities of Northern Mexico between Matamoros and Ciudad Mier also contribute to the explosive growth in the Rio Grande Valley.
The Economy
The Rio Grande Valley has benefited economically from the development of maquiladoras. These diverse industrial plants were first introduced by the Mexican government in the 1960s to encourage economic expansion on the border. They have attracted a variety of U.S. corporations as low-wage assembly and manufacturing centers.
Relaxed trade restrictions between the U.S. and Mexico have also helped to drive investment and growth in the RGV. As a result, a robust warehouse and transportation center has blossomed. The North American Free Trade Agreement in the 1990s also increased job creation in the region. A consistent rise in new home construction has also created a robust employment market for many levels of construction workers, equipment operators, and skilled tradesmen.
The region’s oil refineries and petrochemical plants serve the nearby fields, and pipelines carry natural gas to the U.S. and Mexico. The Rio Grande Valley is also home to cotton mills, distilleries, sawmills, brick plants, and a host of other industries.
During the past two decades, this unique area has made impressive advances, with extraordinary growth in population, industrial expansion and real estate development. Job opportunities, and the quality of life and affordable cost of living in the Rio Grande Valley continue to attract people to the region. The U.S. Department of Housing and Urban Development forecasts non-farm payrolls to increase by 2% annually over the next several years.
The People
The Rio Grande Valley continues to be one of the fastest growing regions in America. The combined McAllen-Edinburg-Mission metro area became the 5th largest metropolitan area in Texas during 2015. The Mexican border cities of Matamoros, Rio Bravo, and Reynosa add another 3 million people to the area’s population, creating a diverse international regional metropolitan area of more than 4 million residents.
The entire population in the RGV – including U.S. and Mexican border cities – is larger than the combined population of 25 U.S. states. The workforce is also youthful and diverse. Nearly 60% of the people in the Rio Grande Valley are under the age of 35, while Latino Hispanics represent nearly 90% of the region’s population.
The community’s investment in higher-level education also helps to drive population and business growth:
- University of Texas-Pan American campus in Edinburg and the University of Texas at Brownsville have merged into the University of Texas Rio Grande Valley to increase the level of education opportunities
- University of Texas Rio Grande Valley medical school and a Texas A&M University campus in McAllen are expanding the number of post-secondary education programs
- Public and private hospitals and medical facilities across the Rio Grande Valley are attracting high-income medical professionals to the region
The Major Rio Grande Valley Cities
The Rio Grande Valley has become the epicenter of stunning growth and stands out as one of the fastest growing regions in Texas and the United States.
There are three large U.S. cities in the RGV region:
McAllen
McAllen is nicknamed the ‘Jewel of the Rio Grande Valley’. Located in the center of the RGV, the city attracts a diverse mix of young entrepreneurs and tech savvy innovators, families, and retirees.
The city is recognized as the retail center of South Texas and Northern Mexico, with a consumer base of over 10 million people within a 200-mile radius. Over 80 of the Fortune 500 global manufacturing companies also have operations in the McAllen/Reynosa region.
Key growth factors that are transforming McAllen and the surrounding area into a region for international trade include:
- McAllen is only 8 miles from the border with Mexico and serves as a direct link between U.S. and international markets
- NET ranked McAllen as a “Top 10 City in the U.S. with The Biggest Influx of People, The Most Work Opportunities, and The Hottest Business Growth”
- McAllen was listed #1 in the list of “Boomtowns for Cities with Rising Salaries”
- In 2018 SmartAsset Magazine listed McAllen as the nation’s number one most affordable place to retire
Harlingen
Located 36 miles east of McAllen, Harlingen is a major port city situated in the heart of the Rio Grande Valley.
The city is investing heavily to increase the cargo volume capacity of the port by deepening and widening shipping channels, rebuilding docks to accept liquid bulk product, and expanding existing railyards. Warehouse and distribution projects and retail, office, commercial, and medical facilities are also being developed to serve the diverse needs of business in Harlingen.
Key growth factors in Harlingen and the surrounding area include:
- Free Trade International Bridge just south of Harlingen at Los Indios provides fast and easy access between the U.S. and Mexico
- Cold storage inspection facility at the Los Indios Bridge is increasing produce-hauling traffic on the rail bridge
- S. Highway 83 designated as Interstate 2 to allow more product to ship in and out of the region
- Texas A&M College Station is increasing professional educational programs in the fields of technology, engineering, and biomedical sciences
Brownsville
Brownsville is located just 8 miles from the Mexican border near the southernmost tip of Cameron County. In Brownsville and McAllen combined, over 1,000 new manufacturing jobs have been created for an annual growth rate of over 9%.
Job opportunities and a low cost of living attract people to the Brownsville area. According to the city’s Economic Development Council the cost of living in Brownsville is 10% below the national average for the U.S.
Key growth factors in the Brownsville region include:
- Approved expansion of the Port of Brownsville shipping channels will make the port one of the deepest in the Gulf of Mexico, allowing it to compete with other ports along the Gulf Coast
- Stanley Black & Decker’s new manufacturing plant starting up with plans to hire more than 400 people over the next year
- Multi-million dollar high-tech auto parts manufacturing plant owned by SATA
- University of Texas Rio Grande Valley medical school
The Real Estate Markets, Infrastructure, and Education
There are hundreds of miles of hotels, retail, service business, and housing in the Rio Grande Valley. The RGV real estate market is part of a larger international corridor that is twice as big as San Antonio, Texas – and San Antonio is one of the seven largest cities in the U.S.
Although the total volume of space in the region is large, vacancies are consistently low, demand is high and absorption is strong across all real estate asset classes.
Industrial
The industrial market in the RGV is growing with brisk international trade from both U.S. and foreign manufacturing firms, and demand from the military and political sectors. Vacancy rates are reaching record lows of sub-3% with positive absorption and rising rents.
Retail
Recent research by NAI Rio Grande Valley and Michael Uhrbrock, senior vice president of research at the University of Texas Rio Grande Valley, sees retail growth in the region tripling to $13.68 billion by 2030.
By 2040, the population of the U.S. part of the Rio Grande Valley is projected to grow from 1.5 million to 2.5 million residents. When the growth of Mexican border cities is included, the bi-national population of the Rio Grande Valley is forecast to grow to nearly 7 million people by 2040.
Multi-family
Over the past few years developers of multi-family property have struggled to keep up with demand. While nearly 3,000 units were brought to market, volume was quickly absorbed.
Multi-family development in the Rio Grande Valley represents a unique opportunity. The already large population continues to grow. Birth rates in the region are strong, with children already in the educational system. Training and education are at better and higher levels, creating a greater demand for more services and better housing than the area now has.
Infrastructure and Education
The Rio Grande Valley has 12 international ports of entry which deliver more than $41 billion in cross-border cargo. To meet an ever-growing demand, Harlingen and Brownsville – both port cities in the RGV – are investing heavily in infrastructure improvements to increase the cargo volumes they can accommodate.
Valley communities are also making significant investments in the region’s current and future workforce:
- Expanding Career and Technical Education (CTE) and Continuing Education (CE) offerings for workforce development
- Helping to broaden the reach of these programs by increasing state investments into community college funding programs
- Maintaining existing state funding for programs including Apprenticeship Texas, Skills Development Fund, and Jobs and Education for Texans (JET) grant program
These investments in infrastructure and education help meet the needs of today’s companies, ensure that the RGV will continue attracting future business growth, and keep the real estate markets in the Rio Grande Valley strong and vibrant.
By overlooking the short-term politics of today and instead understanding the people that live here and the business opportunity that is here, investors in the Rio Grande Valley can earn surprisingly strong returns on investment compared to other markets in the U.S.