Highway 84 Waco Data Center Site Selection: What Changed

Between the March 2026 vote that funded SpaceX's $46.3 million expansion and 300 new jobs at the McGregor rocket testing plant and the June 22, 2026 special meeting where the McGregor City Council voted 5-1 to sell 499 acres inside the industrial park to Galaxy Digital for roughly $15,000 an acre, the Highway 84 corridor took delivery of two anchor decisions inside a single fiscal quarter. That is not a coincidence of timing. It is a repricing.

For most of the last decade the pitch on this corridor was that land west of Waco was cheap because the utilities were adequate and the traffic light at Speegleville Road was tolerable. The Speegleville diamond interchange opened summer 2025. Galaxy's Project Merlin will draw 74 megawatts in its first phase with an appetite for multi-hundred-megawatt expansion by 2030. The pitch has changed. The binding constraint on a Highway 84 site is no longer whether the acreage exists. It is whether the power interconnection and the water allocation will clear before Galaxy, SpaceX, Knauf, Messer and EFC Gases absorb the regional headroom.

"They're not buying up somebody's farm. This company, Galaxy, did not ask for anything, no incentives, no tax abatements. They are paying for their own infrastructure." — Andrew Smith, McGregor Economic Development Corporation executive director, quoted in the Waco Tribune-Herald on the June 22 sale

Smith's quote is the sound of a seller who no longer needs to concede anything. That posture is the story.

The five diligence questions that just got harder

If you are underwriting a Highway 84 tract in the second half of 2026, this is the order in which questions should now be asked, not the order most brokers were asking them in 2023.

1. Which utility serves the tract, and does it have committed capacity? Galaxy is developing with Heart of Texas Electric Cooperative and funding a private substation on its own campus. If your target site sits inside a different service territory, or on the wrong side of an interconnection queue, that fact matters more today than the price per acre.
2. Is the water and wastewater commitment in writing? The 2023 Waco-McGregor wastewater agreement that let Trane and Vossloh Fastening Systems relocate their service to Waco's Metropolitan Area Regional Sewerage System was three years in the making. Nothing about the pace of those negotiations has accelerated.
3. What is the ERCOT interconnection status of neighboring loads? Galaxy's first phase is 74 megawatts. ERCOT's large-load threshold begins at 75. That one-megawatt gap is not accidental, and it tells you something about how tightly the queue is now managed for anything larger.
4. Is the tract encumbered by the McGregor Executive Airport zoning board? The joint Waco-McGregor board still governs land-use changes on parcels near the airport, a settlement that dates to the 2004 resolution of the earlier annexation dispute. Rezonings there take time that a buyer often does not price.
5. What is the anchor stack within three miles? SpaceX's 4,000-acre test site with 16 stands, Knauf Insulation's 600,000 square feet, Messer's air-separation plant on Bluebonnet Parkway, and the announced $210 million EFC Gases and Advanced Materials facility all sit in this concentration. Each one has a first claim on something your future tenant will also want.

Lead your underwriting with those five questions, in that order. The land is the easy part now.

Reading Galaxy's 74-megawatt phase as a signal

A single number in the Galaxy press release does more work than the rest of the announcement combined. The initial phase is sized at 74 megawatts. ERCOT's registration and study process treats loads at or above 75 megawatts as large loads with additional scrutiny and longer study timelines. Galaxy structured the phase to sit just below that line, then publicly stated the intent to coordinate with the utility before expanding above 75.

That structure tells a buyer two things. First, sophisticated operators are willing to phase around ERCOT thresholds rather than wait through the queue, which means they can move faster than mid-sized users who cannot afford to design around grid rules. Second, the transmission upgrades needed to serve a multi-hundred-megawatt Merlin will consume regional capacity headroom on the same feeders that a light-industrial or flex user would draw from. Galaxy has stated a target of receiving power in 2028. Everything smaller that wants power on the same corridor should assume it is now behind at least one utility milestone that was not on the schedule twelve months ago.

The water column of the underwriting model

For most of the corridor's history, water was a background assumption. The 16-inch line connecting McGregor, Waco, and Woodway was funded in 2018 and completed in 2021, and it was treated as a solved problem. It is no longer treated that way locally. The Waco Tribune-Herald has reported through the summer of 2026 that McGregor and SpaceX have been accused of overpumping water as rocket testing has increased in cadence, and Galaxy's approvals were questioned in public comment on exactly this ground, even though the company designed Project Merlin with a closed-loop cooling system and capped noise at 65 decibels at the property boundary.

Whether or not the water complaints ultimately hold up, they are now part of the political permitting reality. A buyer evaluating a Highway 84 tract for a manufacturing or food-processing use should assume that any new large water commitment will be reviewed against the aggregate demand of the corridor's anchors, not evaluated in isolation. Diligence that would have been a phone call in 2022 is now a written service commitment from the appropriate city.

The anchor stack, in one view

Read this as a portfolio rather than a list. A rocket propulsion tenant, a hyperscale AI campus, a building-materials manufacturer, an industrial gas operator, and a specialty gas and materials plant do not compete with each other for customers. They compete with each other, and with everything smaller that arrives after them, for the same substation capacity, water rights, road frontage, and MEDC staff time.

A second-order effect worth pricing in

McGregor's certified industrial values rose 40 percent year over year to $573 million, and McGregor ISD's industrial base rose 39 percent to $596 million, according to the most recent certified appraisal reporting from the Waco Tribune-Herald. Galaxy has agreed under its development agreement to add a minimum $130 million in property-tax base and at least 30 full-time positions at a $60,000 minimum salary. Woodway, farther east on the corridor, adopted its Woodway Forward comprehensive plan in June 2026, which preserves Highway 84 commercial designations while insulating adjacent residential areas.

The practical read for an owner or investor already holding on the corridor:

• The industrial tax base absorbing more of the load can moderate pressure on rate increases at the city and school level. That is a mild but real tailwind for holding costs on existing commercial and industrial parcels in the McGregor and Woodway service areas.
• Woodway's comprehensive plan hardens the boundary between the commercial spine and its residential neighborhoods, which stabilizes long-run zoning expectations for tracts already inside the commercial corridor and makes speculative rezoning of adjacent residential parcels less likely.
• The Concourse mixed-use plan next to McGregor Executive Airport, the 14-acre Sunwest Boulevard listing marketed by Onward Real Estate, and Baylor Scott and White's earlier land acquisition at West 84 and Sunwest all sit downstream of the same utility and access decisions Galaxy just accelerated. Timing matters more than it used to.

FAQ

Does the Galaxy deal make Highway 84 land more expensive? Not uniformly, and not immediately. Galaxy paid roughly $15,000 an acre inside a city-owned industrial park with no incentives requested, which is a specific comp for a large, utility-served tract sold by a municipality. Private tracts, smaller parcels, and sites requiring assemblage will price against their own utility and access facts, not against the Galaxy comp.

Is the water supply actually at risk for a new user? The 16-inch McGregor to Woodway line is in place and the Waco Metropolitan Area Regional Sewerage System has capacity for negotiated additions, as the Trane and Vossloh service agreements demonstrated. The risk is in political review and timing, not in a hard supply cap. Written commitments are the deliverable that matters.

How should a mid-sized user think about competing with the anchors? Do not underwrite a site that requires the same utility scale as the anchors. Underwrite mid-sized flex, adaptive reuse of existing tilt-up, and infill parcels where the interconnection load fits comfortably below the ERCOT large-load threshold. That is the corridor's remaining discount, and it will not last indefinitely.

Working the corridor with a written thesis, not a headline

If you own on Highway 84, are underwriting a site here, or are advising a tenant on where to land in western McLennan County, the Galaxy announcement should change your diligence sequence, not just your conversation topic. Kelly Commercial can walk the specific tract, the specific utility service area, and the specific anchor adjacency with you, and put a written thesis around the deal before the next phase of the corridor prices in. Let's Get Started.