San Antonio Approaches Urban Maturity With Growth in Downtown Office Space

Print Share on LinkedIn Comments More
Frost Tower is nearing completion.

Bonnie Arbittier / Rivard Report

Frost Tower is nearing completion.

A wave of new office development is coming to urban San Antonio. Eight new projects totaling more than 2 million square feet of rentable office space are either under construction or significantly through the development pipeline.

After 30 years of limited new office construction, these developments will have significant impact on downtown, and are testaments to the influence of investments of the past decade.

Projects Underway

In the Central Business District, Frost Tower leads the pack as the largest (460,000 square feet) and tallest (23 stories) new office building on the list, and is the first office high-rise to join the downtown skyline in 30 years. Co-developed by local developer Weston Urban and Dallas-based KDC, the project will be the new home of Frost Bank.

Nearby, USAA recently acquired buildings at 300 Convent and One Riverwalk Place, and has begun moving hundreds of employees downtown, with plans for more to follow in the next several years.

Southeast of downtown, Zachry’s proposed 200,000-square-foot office building in Hemisfair will bring Class A+ office space to an area of town historically dominated by tourists and convention attendees. Part of Zachry’s mixed-use development of Phase 2 of Hemisfair, the office building will look out over Civic Park, which it will share with a 200-room boutique hotel, significant retail, and several hundred units of multi-family development. The project is slated for completion in 2021.

The Tower Life building seen between the hotel (right) and office tower planned for Hemisfair.

Courtesy / Overland Partners

The Tower Life building as seen between the hotel (right) and office tower planned for Hemisfair.

The Broadway corridor and the Museum Reach are clear leaders for the number of new projects that are either under construction or have been announced. Pearl developer Silver Ventures is currently building two towers totaling 344,000 square feet of office space near the former brewery, with Credit Human as the lead tenant.

Graystreet Partners is redeveloping the San Antonio Light and Print buildings (totaling 121,000 square feet), and construction is continuing on the $150 million redevelopment of the former AT&T Buildings (430,000 square feet) for CPS Energy’s headquarters at 530 McCullough Ave.

Several other projects are in various stages of development along Broadway but have not yet broken ground. At the corner of Broadway and 8th Street, Hixon Development and the Cavender family have started demolition to prepare the site for their 140,000-square-foot mixed-use project, bringing the first mass timber construction building ever to Texas.

Graystreet Partners is planning a mixed-use hotel-office tower at Newell Avenue and Broadway Street that will include 130,000 square feet of office space. Finally, Jefferson Bank recently purchased nearly an entire block on Broadway between East Josephine and East Grayson streets and has announced plans for a 200,000-square-foot office building in partnership with Milam Real Estate Capital.

The 1900 block of Broadway Street.

Bonnie Arbittier / Rivard Report

Jefferson Bank has purchased nearly an entire block at Broadway and East Grayson streets with the intention of relocating its headquarters there.

Why Now?

To appreciate how significant this change is for San Antonio, consider the following: Since the completion of the Weston Centre 30 years ago, not a single office building larger than 50,000 square feet has been developed downtown. In the same 30-year period, more than 65 office buildings that size or larger were built on the North Side, totaling more than 7.4 million square feet. Many of these buildings are located along Interstate 10 and Loop 1604, with much of the rest located along U.S. Highway 281.

So why are we now seeing so much new office space coming to market downtown? Several key factors have finally tipped the balance in favor of these new projects, and they all have to do with making downtown a place where workers want to spend their time before, during, and after work.

First, we must look at some of the public projects that have defined our urban core over the past decade. Large investments like the Museum Reach River Improvement Project, Hemisfair, San Pedro Creek, and the 2017 bond’s Broadway Corridor Improvements project create anchors around which new development – and tax receipts – can grow. Look no further than the Pearl as an example of how a public project like the Museum Reach can encourage private investment.

Sparked in part by investments in public projects and a shift in housing preferences by millennials and empty nesters, multi-family and infill housing development is another reason why new office space is finally coming to downtown. Thousands of new multi-family and infill housing units have been added to downtown in the past eight years, making it more attractive for businesses to grow roots in areas where their workers already live. In fact, many companies are now making leasing decisions with a focus on employee attraction and retention, with price-per-square-foot as a smaller but still important factor.

Finally, the arrival of new restaurants, bars, and other retail makes it attractive to work in these areas. The restaurants and bars of the Pearl, Hemisfair, and Southtown, as well as the reemerging retail scene on Houston Street provide places for workers to gather for lunch and happy hour without getting in their cars. Similar to locating near where employees live, being near the places they like to spend time outside of work helps employers attract and retain sought-after millennials and skilled workers.

Balancing the Ecosystem

As our urban core has undergone the transformation of the past decade, the lack of new, modern office space has left the urban San Antonio real estate market somewhat out of balance and acted as a limiting factor for the area. For example, many residents of Midtown still commute to the suburbs for work. They remain dependent on their cars, eliminating one of the primary environmental, civic, financial, and lifestyle advantages of living downtown. The ability to walk or bike to new office projects will benefit not only these residents, but also help keep rents and tenancy strong for the downtown multi-family market.

Retailers, especially restaurateurs, should also see these new projects as a major boon to their businesses. Although dinner reservations go fast at many of our most popular restaurants, it’s easy to get a lunch table at restaurants in the Pearl. Sales receipts, especially during lunchtime, should improve as the daytime population increases.

This wave of new office development has been a long time coming and is the missing piece to the maturity of our transforming urban core. It signals that downtown San Antonio is hitting a point of maturity and momentum that many have been hoping for and working toward for years, and it promises to impact our city for decades to come.

 

9 thoughts on “San Antonio Approaches Urban Maturity With Growth in Downtown Office Space

  1. Good summary, Drew. I hope this new wave office development in downtown area would trigger for more housing in downtown. And hopefully, those folks who work in those office buildings would live in downtown as well.
    For the public sector, I think they should make those streets in the area more walkable, attractive for pedestrians, and encourage mixed-use development with least parking space as possible.

  2. “keep rents and tenancy strong for the downtown multi-family market.”

    No mention of workforce housing or mixed-income housing. The line above pretty much rules out any of that at least for this writer.

    That doesn’t make it less important or offer an excuse to minimize the issue. This city and the developers have been dragging their feet for years.

    • Agreed, but Mr. Smith probably didn’t mention mass transit ’cause that isn’t the focus of this particular article (up to you and me to bug our reps, local and state, to tie everything together)

  3. I wouldn’t say it was mature but definitely a promising start. Lots of opportunities still await downtown SA. Keep going! Keep building!

  4. Thank you Drew Smith for your article. I am glad infill development and commercial renting has been rekindled downtown, but here on the Far West and North Sides: What are we building? And how do we connect the larger influx of people to their work, retail (includes groceries), and home out here, especially with public transit? It still seems like the same approach and story 30-50 years ago (I see that the flyovers for 410 and 151 and 90 are pretty much complete. Yes, needed, but are we going to get VIA-trackless trains out there?)
    Please bring your enthusiasm and considered, thoughtful opinions also out here to The Loops. It ain’t slowing down out here, and won’t anytime soon.

Leave a Reply

Your email address will not be published. Required fields are marked *