Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.
Issue link: https://texasrealestatebusiness.epubxp.com/i/591312
38 • November 2015 • Texas Real Estate Business www.REBusinessOnline.com The story of the tortoise and the hare can be used to describe the ma- jor metros throughout Texas. In recent years, Austin has sprung to life while San Antonio has developed slow and steady. Most recently, however, it ap- pears San Antonio's ofce market has received a jolt — the second quarter of 2015 saw three to four times more activity than historic averages indi- cate — and San Antonio now boasts its lowest vacancy rate since 2008. With a 3.4 percent unemployment rate, San Antonio ranks third on the list of major metropolitan cities across the country with the lowest unem- ployment rates, trailing only Austin at 3 percent and Salt Lake City at 3.1 percent. These numbers are indicative of a much larger picture of San Anto- nio. Uniquely positioned to capture the spillover of tech companies and supporting businesses from Austin, its neighbor, San Antonio's low rent- al rates for both Class A and B ofce space along with stable infrastructure make it a viable, attractive alternative for many major businesses looking to expand. But where in San Antonio is all this activity erupting? San Antonio's new- est residents are interested in one area, and you need look no further than the central business district. Commer- cial real estate developers are wast- ing no time capitalizing on this trend and changing the face of San Antonio along with the tastes of these new- comers. To start, HemisFair Park — the original site of the 1968 World's Fair — is undergoing construction to con- vert more than 18 acres into an urban district with multiple parks, resi- dences and local businesses to serve the downtown area. Completion of the entire HemisFair District is set for 2020. Construction is scheduled to begin in fall 2016 on San Antonio's frst new ofce tower in almost three decades — the Frost Tower. The proposed build- ing is an iconic new headquarters for Frost Bank at Flores and Houston streets. San Antonio city councilman Joe Krier compared the proposed tow- er to an Austin ofce tower, in the way of it being a "wow building." Weston Urban, one of two design teams be- hind the project, says it is committed to "building something special." The goal of the tower is to deliver a build- ing that will distinguish the San Anto- nio skyline and become a magnet for new residents and tourists alike. San Pedro Creek was mistaken for a sewer at one point, but the $175 mil- lion project to transform the creek into a linear park will not only maintain and preserve its role in downtown food control, but also re-imagine the creek as an urban park. This will be an ideal accompaniment to the urban of- fce and residential development once completed. Although dirt has yet to turn for San Pedro Creek, residential plans are in talks as this revitalization is set to be a catalyst for the reinven- tion of the business district. SA2020 Along with these major downtown developments, in 2011 a partnership was formed to implement the SA2020 vision, a framework plan with a set target of 7,500 downtown housing units. Currently, there are 22 residen- tial projects under construction, some being rehabbed former factory build- ings. The total investment in these housing developments is more than $700 million. With all this urban de- velopment, who is the target market? Millennials. According to recent data from the U.S. Census Bureau, Forbes listed the Alamo City as number one for its increase in millennial popula- tion, trumping other major Texas cit- ies. Houston ranked sixth, while tech- centric Austin and Dallas didn't even make the top 10. San Antonio's 30 percent growth can be attributed to a surge in young population between 2010 and 2013. Millennials make up more than one third of the city's medical technicians, biochemists and web developers. Ac- cording to Workforce Solutions, near- ly half the fnancial analysts in San Antonio are between 22 and 34 years of age. These are all professional po- sitions being flled, and the demand continues to soar in areas in and around the city. The infrastructure is already in place to accommodate the millennial popu- lation's live/work/play lifestyle. San Antonio ofers many trails throughout the city, making it a friendly outdoor hotspot to exercise for all ages, wheth- er walking, running or biking. With the implementation of B-Cycle, a bike rental program with stations through- out downtown San Antonio, fnding downtown entertainment or getting to work is easy and accessible. Reasons attributed to the millennial boom in the Alamo City are variable and vast. For example, those just grad- uating from college but not wanting to move back in with mom and dad have a quite lot to consider: Where do I want to live? What can I aford? Here in San Antonio, the average rental rate for a home is $990, whereas Houston, Dallas and Austin have me- dian rates above $1,300. Millennials like single-family housing, but want city-centric amenities and that is ex- actly what Downtown San Antonio is ofering with its new development. It may appear that San Antonio's recent jump in activity could just be a blimp on the radar. However, with its diversifed economy and solid com- mercial real estate market, this renais- sance stands to be much like San An- tonio's historic growth: "steady as she goes." S N A P S H O T: D O W N T O W N S A N A N T O N I O Ernest Brown IV Managing Director, Brokerage, Kennedy Wilson SAN ANTONIO WINS THE RACE WITH CONSISTENCY, DIVERSIFIED ECONOMY San Pedro Creek is a planned $175 million project to transform the creek into a linear park and preserve the area's role in San Antonio's downtown food control.