Why McAllen’s Foreign Trade Zone purchased 1,500 acres on the city’s north side

The McAllen Foreign Trade Zone near South Military Highway has grown over the past five decades into an industrial park of more than 700 acres, but to keep expanding, the organization purchased 1,500 acres north of Monte Cristo Road about 20 miles away. 

“Back when we first started, we were probably one of the first developers ever down there on South Military; it was all farmland, fields, and crops. We’ve seen a lot of growth over the 56 years we’ve been out there,” Mark Garcia, CEO of the McAllen Foreign Trade Zone, told the Rio Grande Valley Business Journal. 

The new site is similar to the Foreign Trade Zone’s roots, it’s undeveloped brush lands, which means it’s going to need significant infrastructure investment from water, to sewer and even internet. The city of McAllen agreed to annex the Hidalgo County land into city limits in 2024. 

“We’re working with the city of McAllen. We need to get water and sewer up there because it’s just a matter of time before we get these companies in front of us saying, ‘Hey, I’m ready to invest.’ But the last thing you want to tell them is, ‘Okay, give me a couple years and we’ll be there.’ We’ve got to be ready,” Garcia said. “It was a strategic move because we knew everything was going to end up growing on the north side.” 

The existing Foreign Trade Zone site already works with about 80 companies and is planning to construct 1240,000 square feet of new warehouse space to meet future demand; its occupancy rate is upwards of 95%, he said. 

The purpose of the zone is to enable U.S. manufacturers to import foreign components to manufacture their own products and to re-export those goods without paying duties. 

“It’s a real benefit to them because normally, anything that comes into a port of entry has to pay duties before it comes into the U.S.,” Garcia said. “So these companies located in a foreign trade zone actually have the ability to store it, then re-export.” 

For example, with vehicle manufacturing, car makers will import all the components from the steering wheel to the tires. If those parts were imported individually outside a foreign trade zone, each component would be subject to a separate duty rate. 

“They can take those components, defer all those duties, and manufacture that vehicle. At the end of the day, that vehicle has a different duty rate as a completed vehicle,” Garcia. “And in some cases, it’s almost duty-free. That’s what we call the inverted tariff option.” 

While the Foreign Trade Zone has McAllen in its formal name, its benefits can extend to businesses across Hidalgo County, it’s not required to build or lease inside the industrial parks, but companies often want a turnkey solution, he said. 

The new Foreign Trade Zone area is also about a mile south of the new overweight highway corridor being constructed by the Hidalgo County Regional Mobility Authority — which would enable tractor trailer traffic to smoothly travel from the international bridges to Interstate 69 heading further north. 

The land for an industrial park and mixed-use development surrounds the former Moore Air Base — which has been retrofitted for the U.S. Department of Agriculture (USDA) research operations. 

And there’s been a big investment in that site. 

Moore Air Base is part of the USDA Animal and Plant Health Inspection Service. It has hosted a fruit fly research facility, but there’s a new $750 million screwworm mitigation facility being built  to breed sterile flies used to fight the pest that threatens to destroy cattle ranching in Texas. 

“There are a lot of opportunities there with this facility going up there, close to 500 employees,” Garcia said. “I think we’re perfectly positioned to be able to offer some alternatives and development out there for industrial space.” 

While construction on the new USDA facility is underway and there are plans for many more employees, the Foreign Trade Zone is working on setting up a temporary food court on the property. 

“We’ve got a lot of ideas, we’re planning on an educational component in this new high-tech type of development,” he said.