Why the Rio Grande Valley’s a Fast-Growing Retail Hub

Located at the southernmost tip of Texas, the Rio Grande Valley lies on the northern bank of the Rio Grande River, which divides Mexico from the U.S. The region is made up of the four counties of Starr County, Hidalgo County, Willacy County and Cameron County. 

While the area continuously deals with the misconceptions that often come with a border region, the reality is that The Rio Grande Valley has transformed into a major international trade destination that is thriving in Texas, the eighth largest economy in the world.

Driven by population growth, a blossoming health-care industry and robust commerce with Mexico, the Rio Grande Valley now has first-rate commercial, retail, industrial, medical, retirement and educational facilities. The region’s transformation into a “rising borderland metropolis,” according to Rice University’s Kinder Institute for Urban Research, is reflected in its sizable binational population—approximately 2.67 million residents, with 1.29 million in the U.S. and 1.38 million in Mexico—making it the second-largest U.S. Mexico border municipality after San Diego-Tijuana.

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One of the biggest drivers for the Rio Grande Valley’s retail boom is due to the region’s unique demographics. The area boasts one of the fastest-growing populations in the country. That growth is complemented by both domestic migration as well as cross-border commerce, including 12 international ports of entry handling over $41 billion in cross-border cargo. Unlike other markets, retailers in the Rio Grande Valley benefit from the thousands of shoppers that are crossing daily from Mexico—many of which do not appear in U.S. census data and might be overlooked when retailers are doing their market analysis.  

This steady flow of cross-border consumer traffic—which Nielsen estimates to be more than 3.5 million yearly—isn’t seasonal. It’s year-round. People are not just crossing the border once a month or during the holidays. In fact, they are crossing the border daily to shop and provide a constant and consistent boost to retail sales in the region. The study also highlights that nearly 63 percent of the 3.5 million consumers make the trip at least one time per month with more frequent visitors crossing five or more times monthly.

Another boost for the area, and key factor in terms of demographics, is the influx of retirees seeking an affordable alternative to, for example Florida. In addition, snowbirds also spend winter months in the region. Recent studies indicate the number of “Winter Texans” is approximately 100,000 each year. The seasonal residents, who want a second home or to spend the winter season in a dry and affordable climate, are often bringing with them higher disposable incomes and create additional revenue streams for retailers.

Despite the demographic support, The Valley remains under the radar for many national retailers. One of the largest and most common misconceptions is that it is an unstable region that is low-income, high-risk, and lacks a strong consumer base. However, the facts are in the numbers.

Many retailers who have invested store locations in the Rio Grande Valley for years would share that their locations in the region are thriving. Cities inside The Valley, such as McAllen and Brownsville, boast high retail sales. Some of the retail locations here have ranked among the best-performing stores nationally for brands in sectors such as big-box discount, soft goods and electronics. This is due, in part, to cross-border consumers who purchase goods in bulk.

Range of retailers

The density of both residents and visitors in The Valley also helps cater to a wide range of price points from discount retailers to luxury brands. La Plaza Mall in McAllen, Texas, for example, has attracted retailers from H&M, Zara and Mango to Lululemon, Kendra Scott and Guess. In 2024, McAllen Mayor Javier Villalabos said that the city’s retail dominance broke records, noting that McAllen retailers earned $96.8 million dollars in sales tax revenues for the city— shattering its all-time sales tax record.

Grocery, dining and entertainment have also found ways to serve the growing population such as through niche grocery stores with specialized offerings. In fact, several restaurants who have expanded in the area have said they are some of their highest sales and best margins anywhere in the country. For example, Baker Katz represents Darden Restaurants—a national leader in the full-service restaurant industry—who has significantly expanded in the Rio Grande Valley and experienced growth for several dining concepts such as Yard House, Olive Garden, LongHorn Steakhouse and Cheddars.

As with any market, understanding the competition—such as the highly competitive grocery and mid-tier dining in the area—is important when looking to establish a presence in Rio Grande Valley. Also, businesses must factor in the logistics of cross-border shopping, such as packaging removal practices, to reduce important taxes.

Another consideration when retailers are looking to enter the market is that success in the Rio Grande Valley often depends on making sure offerings are tailored to the local consumer base. Bilingual marketing, culturally relevant branding and community engagement are all important considerations towards building a consumer base in the area.

Overall, for retailers willing to look beyond outdated perceptions of what border towns looks like, the Rio Grande Valley is a market that has proven it is full of opportunity. The region has a diverse and loyal customer base, strong cross-border commerce and foot traffic as well as record-breaking retail sales.

Jason Baker is principal at Houston-based Baker Katz, a full-service commercial real estate brokerage firm.

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