Old McAllen Civic Center site ‘moving forward’ as city seeks to renegotiate incentive deal

Real estate developer Michael Fallek is confident that the 13-acre McAllen City Center project will have two hotels, a parking garage, and retail someday — but not this year. 

That’s what Fallek told McAllen commissioners on Monday when he asked to change the planned unit development, which is a master plan he filed with the city when he agreed to enter into a Chapter 380 agreement with McAllen. 

McAllen commissioners declined to change the development plan, and instead said they preferred to change the terms of Fallek’s economic incentive deal. 

In 2024, McAllen CityCenter Ltd inked an economic incentive deal with the city in which Fallek agreed to invest $50 million on redeveloping the site by Jan. 1, 2026. 

In exchange, the city would grant the developer 25% of the sales taxes generated from the project for 10 years and reimburse its property taxes for the first five years — starting with a 100% reimbursement in the form of a grant for its first year. 

Construction crews have been working on the site near the intersection of South 10th Street and Interstate 2 for months, but the project has hit a few roadblocks. 

Still, Fallek said he expects the first 32,000-square-foot multi-tenant building to go up beginning in April. 

But a previously planned parking garage and boutique hotel is on hold for now and will become a surface parking lot in the interim, he said. 

Plans for an $18 million Courtyard by Marriott with 134 guest rooms and meeting space, which was expected to be built at McAllen City Center by November 2025, are also stalled. 

Fallek, however, said that hotel is still coming — along with a $5 million restaurant. 

In December, Castle Hospitality, LTD listed a project with the Texas Department of Licensing and Regulation for the construction of Portillo’s, a Chicago-style quick-service restaurant that will feature an outdoor patio. 

But it’s been difficult to get the development off the ground to sell out all the lots, Fallek said. He’s facing economic uncertainty, higher interest rates, deed restrictions on the land that limit his potential pool of retailers to lease space, and stipulations from the city of McAllen to ensure the tenant mix and surrounding landscape are suitable. 

The site is the former McAllen Civic Center, which was demolished years ago, and the original developer was a partnership that included Simon Property Group, the owner of La Plaza Mall. 

“I think the market is waiting for something there to go vertical before they believe the project is real. That property has sat vacant for so long. It’s complicated and difficult,” Fallek told the Rio Grande Valley Business Journal. “We’re having to fit through a narrow pathway. The market has changed and there’s so much economic uncertainty. It’s going to be an outstanding project; it’s just taking a little longer.”