E-commerce and last-mile logistics facilities are booming in San Antonio, suggest reports from real estate analyst firms.
The sector’s expansion is reflected in the growing footprint of warehouses and the large industrial spaces needed for the transport of physical goods, whether that’s to construction sites, brick-and-mortar stores or directly to consumers.
The San Antonio metro area saw about 4.2 million square feet of industrial real estate enter new leases in 2021, according to commercial real estate analytics firm CBRE — more than triple what that figure was in 2020.
“It boils down to the fact that San Antonio is very well located on the I-35 corridor,” said Rob Burlingame, an industrial broker at CBRE. “It’s easy to get product from San Antonio to other parts of the United States and other parts of Texas.”
He said the pandemic exposed deficiencies in the supply chain. “Companies are trying to get more product to more places, and closer to consumers.”
Amazon leads the charge, having just completed a $200 million, 4 million-square-foot distribution center on the city’s far East Side, at 6806 Cal Turner Dr. Amazon has rapidly expanded in San Antonio in recent years, continuing with its plans for another million square feet of development in far West San Antonio, as well as similar facilities it plans to build in San Marcos and Pflugerville.
But the e-commerce giant is also joined by local logistics firms expanding in the region, such as San Antonio’s Pallet Logistics of America, Packaged Produce Solutions and Schertz’s CDS Moving Equipment — all of which have leased new industrial space under the pandemic, according to real estate analytics firm CoStar.
CoStar analyst Daniel Khalil also pointed to the 2019 ratification of the United States-Mexico-Canada Agreement, a successor to NAFTA, as an accelerant for the area’s “incredible levels of leasing activity” for transit-oriented industrial space.
San Antonio, working with Mexican ports and the Port of Laredo, is a gateway hub for international exporters looking to bypass California’s backlogged ports to access the U.S. consumer market.
Amid the pandemic, digital sales nationwide soared in 2020, grew by nearly 15% in 2021 and continue an upward trajectory with no end in immediate sight, according to a recent report from analytics firm Cushman & Wakefield. The report also says the real estate demands of e-commerce are more intensive than traditional warehouse uses, requiring three to four times the amount of space.
Local logistics, delivering goods from one end of San Antonio to another, have also played a role in the sector’s expansion.
H-E-B launched curbside pickup in 2015, beginning its own foray into last-mile delivery services that have seen increasing investment from the company. The grocery chain bought Favor Delivery in 2018, doubling the Austin-based company’s statewide coverage area amid the first year of the pandemic. In 2020, H-E-B also worked with Swisslog Logistics to set up automated micro-fulfillment centers at its facilities.
Kroger, the national grocery chain that was once H-E-B’s main local competitor and may soon be so again, last week announced plans to build a produce warehouse and delivery hub in Northeast San Antonio, set to open this spring.
Among the e-commerce firms that recently moved into San Antonio is Curri, a California-based startup that describes itself as “Uber for construction materials,” coordinating gig drivers to deliver lumber and other supplies to construction sites across the city.
“There’s a big market for us there — the construction market is booming,” said Curri marketing director Alice Warnier.
The conditions she described as opening the field for Curri give insight into the kind of pandemic-era trends driving the e-commerce boom in many industries. She said the construction industry, normally slow to change, underwent a rapid digitization under the 2020 lockdowns. Additionally, the dramatic swings in supply and demand for many companies has created a need for the sort of flexible labor that Curri offers.
Growth in San Antonio’s e-commerce real estate sector is likely to continue, analysts at CBRE and CoStar say.
The San Antonio industrial market has just under 8 million square feet of industrial space under construction, according to CBRE, with two-thirds already preleased, including another Amazon distribution center. Meanwhile, the warehouse workforce population in the I-35 corridor between San Antonio and Austin, is expected to grow by more than 20% in the next decade and stands at around 46,000 now.
“It seems like everyone has taken a big leap into the e-commerce game,” Burlingame said.