Beer and Bubbly Could Mean More Buildings

JOSHUA, TX-To most people, beer and wine are beverages to be enjoyed, hopefully in moderation. Beer and wine could also be considered the final pieces of the puzzle to commercial real estate growth in this town of approximately 6,000 people. Or rather, the recent passage of three propositions turning Joshua from a “dry” town in which alcohol sales of any kind were banned into a limited “wet” town in which the sale of beer and wine in some establishments is permitted is the final piece of that puzzle.

Nor was Joshua alone in approving beer and wine sales – nearby Alvarado’s citizens approved similar measures in November.

“Joshua has a lot going for it,” explains Jack Thompson, president of Orasi Development in Fort Worth whose company provides economic development services to the city. “There are strong traffic counts on SH 174 and a higher-than-average home value than either Cleburne or Burleson. But what has really hamstrung us was not being able to sell beer or wine.”

There is little doubt that Joshua has become a good target for commercial real estate development. Located about 30 miles south of Fort Worth, Joshua fronts SH 174, a major north-south route that sees a great number of trucks hauling cargo from Interstate 35W south into Cleburne (the county seat), Rio Vista and other southern counties. The town has also been the beneficiary of rooftop and commercial real estate expansion in Burleson, TX just to the north.

“State Highway 174 has become a major thoroughfare for Burleson, Joshua and Cleburne (the Johnson County seat),” says Bobby Hoffman, property manager with Burleson Business Leasing, which manages and leases commercial real estate throughout the area. “Burleson is continuing to grow; and is continuing to grow south. There are a lot of rooftops in the area, with more likely to come.” Furthermore, Joshua is on a state highway, has plenty of land available for development and a pro-economic-development city council and chamber of commerce.

Real estate 101 points out the obvious: Commercial real estate, for the most part, follows rooftops. But for some developers, if an area doesn’t allow alcohol sales in any form, fuhgeddaboudit.

According to the Texas Alcoholic Beverage Commission, as of June, 2011, there were 46 completely “wet” counties in the Lone Star State and 25 completely “dry” counties, with the remaining falling somewhere in between. The TABC offers the opportunity for various counties and municipalities to put the question of “wet versus dry” to the voters. Along these lines, it’s not uncommon in a particular county, to see a mish-mash of municipalities ranging from 100% dry to fully wet. In Johnson County, where Joshua is located, Cleburne (the county seat) and Burleson, just north of Joshua, permit beer and wine sales. However, towns such as Cross Timbers, Godley and Keene are 100% dry.

This patchwork quilt of alcohol municipal ordinances is what has hurt Joshua, Thompson tells GlobeSt.com. Cleburne to the south and Burleson to the north have absolutely no compunction about allowing the sale of beer and wine, either in package form or in restaurants (for hard-liquor sales, residents have to go further afield). Thompson says Joshua had a booth at the recent International Council of Shopping Centers’ conference (ICSC) in San Antonio in an attempt to drum up business and interest. Restaurant retailers, in particular, were very interested in Joshua, but legal restrictions against selling beer and wine were problematic. It didn’t make it worthwhile to these retailers, when they could go 10 minutes north to Burleson or south to Cleburne, and set up operations without the fuss.

But with the passage of the propositions, retailers, especially inline retailers, are interested in Joshua sites, particularly the Joshua Station mixed-use development on SH 174, developed by the Tolsons.  If all goes according to plan, Joshua Station should be anchored by the Brookshire’s grocery store that is currently located on Farm-to-Market Road 917.

But does it automatically follow that serving beer and wine leads directly to commercial real estate development? Will Joshua suddenly see a bevy of retail and restaurants spring up along SH 174 on what is currently vacant land? Paul R. Goebel, professor of finance at Rawls College of Business at Texas Tech University in Lubbock says the issue isn’t necessarily black and white. He says following the passage of package alcohol sales in Lubbock some years ago, there was an increase in commercial development – but much of that was tied to retrofitting existing buildings to accommodate the package sales, as well as new stores being built. But Lubbock differed from Joshua in that the former did allow alcohol “by the drink” in restaurants and bars even before the “wet” election, though similar to Joshua, residents of Lubbock could buy their packaged stuff on stores built just outside the city limits.

 “Would we expect to see a population increase, or new industry development in Lubbock as a result of the change in package sales? I doubt it,” Goebel says.

Mark G. Dotzour, chief economist, real estate center at Texas A&M University, says he could see where passage of ordinances allowing beer and wine sales in a community could certainly help the restaurant trade and would attract more eateries to an area. “There is a certain segment of restaurants that obtain revenue from alcohol sales, and they wouldn’t consider coming into an area without being able to do that,” he added. “And restaurants are a growing business right now.”

In short, Joshua residents shouldn’t look for a plethora of cranes, backhoes and bulldozers to come sweeping through the city anytime soon. Even Thompson isn’t looking for developers to come barreling down SH 175, pointing out that Brookshire’s needs to be up and operational for others to follow. “We’re having folks revisit the Joshua Station pad sites now,” he adds.  “And developers are ready to build the inline stuff.”