San Antonio is booming without quite all of the complications that come with rapid growth, according to the speakers at Bisnow’s recent San Antonio State of the Market event.
The city has managed to dodge the high real estate prices of Austin or congestion like Houston. San Antonio also has first-rate infrastructure that will support further growth, the speakers said.
The NRP Group Vice President of Development Timothy Cone, Kairoi Residential principal Madison Marceau, Harris Bay Managing Partner Jake Harris and Institutional Property Advisors Associate Drew Garza, who moderated.
San Antonio is attracting a lot of new people — just last year, a net of 24,000 more. The industries supporting that growth are some of the most robust parts of the U.S. economy, including biomedical, tech, tourism and the military.
Millennials are moving to San Antonio to take jobs and, in some cases, escape places with higher costs of living or real estate, such as Austin.
The city is investing in infrastructure. That trend accelerated last year when voters overwhelmingly approved a bond issue to put money into drainage, flood control, streets, sidewalks and other important infrastructure.
NRP Group Vice President of Development Timothy Cone said Texas is a booming market for his company, which develops, builds and manages low-income and market-rate multifamily product. In fact, NRP Group is too busy to expand to adjacent states, he said.
One NRP Group project is the 271-unit Baldwin at St. Paul’s Square. "We felt that the East Side was ignored, even with activity in the Broadway Corridor and the Pearl. The site is a five-minute walk from Downtown, and we’ve opened the first of four phases. The market has responded, and we’re above our numbers on leasing, with the first people moved in two weeks ago."
Harris Bay Managing Partner Jake Harris said he is bullish on the San Antonio market, including lesser-developed areas, such as the East Side location of his company’s Essex Modern City project.
"We’re getting close to having the site ready for development, late this year or early next year. There will be 250 multifamily units, parking, office, condos and row homes," Harris said. "It will be a catalyst for the East Side. That’s becoming a new corridor that’s prime for redevelopment, since it is accessible to everything else in Downtown, to its urban renaissance."
Kairoi Residential principal Madison Marceau said his company’s Tribute at the Rim apartment complex on the Northwest Side has seen strong leasing and effective rents. "It has walkability," he said. "That’s important now for any apartment development. In five minutes, you can be in Stoneworks, Rustic, all the bars and restaurants."
Weston Urban CEO Randy Smith, San Antonio Medical Foundation President Jim Reed and Institutional Property Advisors Associate Drew Garza, who moderated.
Weston Urban CEO Randy Smith said his company has a very specific focus, the northwest quadrant of Downtown San Antonio. That focus eventually led him to the development of the 460K SF Frost Tower, which broke ground about a year ago.
"The goal of Frost Tower is to help San Antonio be a better city for our kids," Smith said. "It will have an outsized impact on Downtown, and a long dormant stretch of West Houston Street."
He stressed that the tower "isn’t just our project — there were visionary leaders at Frost Bank and the city of San Antonio involved at every step of the way, and it’s hardly the only project remaking Downtown San Antonio. It’s one of seven Class-A projects on the boards now."
San Antonio Medical Foundation President Jim Reed said that larger trends are impacting healthcare in San Antonio, but the industry is going to remain one of the city’s economic mainstays.
One of the trends is consolidation. "Free-standing hospitals are finding it hard to survive," Reed said. "Larger systems are being created. Vertical mergers, especially within the healthcare industry, is a national trend that will have an impact in San Antonio. So will the enlargement of facilities, especially among specialty centers."
Reed is active in San Antonio’s civic affairs, including chairing the streets, bridges and sidewalks portion of the recent $850M city bond issue. "That sounds like a lot of money, but [it’s] not as much as the demand for projects," he said.
Reed also said that an important factor in the future growth of San Antonio will be the regional centers being fostered by SA Tomorrow. The centers are major organizing elements for the Comprehensive Plan, focusing growth in these regional centers, building on the existing pattern of development. "They’re envisioned as new places to live, work and play," Reed said.
San Antonio billionaire and businessman Red McCombs kicked off the event with a keynote, calling San Antonio real estate robust, but steady.
The world, McCombs said, turns on entrepreneurs, and there is real estate involved in everything. "My parents were from modest backgrounds, so it was a natural thing for me to improve what was going on around me."
"I’m a deal junkie," McCombs said. "I’ve been in many different businesses, and I’m in many now. I buy businesses, or pieces of them, and will double the the investment in five years."
"I didn’t plan on being in retail automobiles, but the opportunity was right at the right time, and eventually we were the sixth-largest dealership in the U.S. I am not a car buff. I sold them for money, and it was a good product.
"I built that part of the business by training my guys, and then selling them part of the business, and that model worked well. … When Japanese cars showed up, I eventually realized they would do well, and started picking up franchises."
McCombs Partners — the investment arm of McCombs Enterprises and a fairly recent addition to his always-growing portfolio — now owns 23 businesses and counting.
Through McCombs Partners, he and his family invest in all kinds of businesses, from startups to fully operational and mature companies, in any industry. At 91, he said, he hasn’t stopped being a deal junkie.
"You never know where deals will be," McCombs said. "They’re all around."