When it comes to the “five factors of awesome” in commercial real estate, San Antonio is behind many other cities. But trying to be something it’s not is the worst thing the city could do to improve its ranking.
That was the advice of Spencer Levy, CBRE‘s senior economic advisor and chairman of Americas research for the commercial real estate firm, who spoke to a crowd of real estate investors, developers, and city leaders at the Urban Land Institute of San Antonio’s annual luncheon Wednesday.
Levy talked about broad trends shaping the future of commercial real estate investment such as the explosion of short-term leases, looming inflation, economic growth, and tumbling interest rates.
“How do you compete in a world with all these crazy changes?” he said. “When I look at any city in the world, I use the same basic method to say this city or place is one I can recommend for investment.”
That method involves a list he calls the “five factors of awesome:” talent, foreign money, live-work-play, ease of doing business, and infrastructure.
As for tech talent, San Antonio may be ranked 47th on a list created by CBRE – San Francisco is first – but that just means the city needs to work harder on bringing that talent here. In the meantime, San Antonio is doing well, he said, in adding back-office and manufacturing jobs and talent.
“This is not Spencer throwing San Antonio under the bus,” he said. “I’m coming here with love, maybe a little tough love. A lot of people in this room think San Antonio’s competitive advantage is low-cost, and it is a competitive advantage. The problem is, it’s not durable and it’s a race to the bottom.”
In addition to working on attracting high-paying jobs to the market, San Antonio should also focus on capturing more foreign investment, he said. “If they like your market, they are going to bring their friends, they are going to bring construction, they are going to bring diversity, they are going to bring everything,” Levy said.
“Know what San Antonio should do? Take the show on the road – go to Dubai, go to South Korea, and Germany, with a big sign that says ‘San Antonio is open for business.’ You will get reward from that that will capture a lot of money.”
The level of a city’s live-work-play quality is also what makes it awesome for real estate investment. So as the city grows, it’s critical that what makes it unique is not lost.
“You think ‘Keep Austin Weird’ is Austin’s slogan? No, it’s Nashville’s slogan, too. … They’re keeping it real, which is a key attractor of talent. Don’t just grow generic awesome. Keep San Antonio’s character in place, and that will be a key to growing the city moving forward.”
Levy pointed to an Arizona State University study that ranked cities according to the ease of doing business with City government. San Antonio didn’t fare well: It came in 54th, behind Austin at No. 41.
“I love San Antonio,” he said. “You are one of the cities I always say is the next up. You’ve been in my conversations about being the next Seattle.” But investors take those standings seriously when considering where to put their money, he added.
Levy also took issue with San Antonio’s inter-city infrastructure – planes, trains, and mobility options that transport people and goods between regions – which he said is more important than intra-city infrastructure.
“The ability to get to a city directly on a direct flight is absolutely essential,” he said. “I flew here from D.C. yesterday. It wasn’t that easy. Get more direct flights to your city.”
But while Levy is encouraging investors to look at markets such as New York and San Francisco as the chance for inflation drops, he’s also recommending San Antonio due to a potential for higher returns and greater job growth. However, he said, “I’m also recommending other markets, so San Antonio needs to compete. But I think the picture for San Antonio is excellent.”
Following his presentation, Levy was joined on stage for a panel discussion with Jenna Saucedo-Herrera, president and CEO of the San Antonio Economic Development Foundation, and Randy Smith, president of Weston Urban.
Along with talk about affordable housing, workforce education, and downtown development, the conversation again turned to infrastructure in San Antonio and the need to improve both public transportation and air service.
While the SAEDF has long focused on jobs and education, which are still priorities, said Saucedo-Herrera, it’s also looking to partner with the San Antonio International Airport on its master plan, and seeking support from the private sector in possibly offering incentives for airlines to bring more direct flights.
Following a strategic planning process, economic development officials in San Antonio are embarking on a “3.0” version of plans to fulfill its mission, she said. That will likely involve fundraising to support its efforts.
“If you get an email from me or Jenna … it’s because we’re coming to ask for money,” Smith said, adding that the San Antonio’s business community has relied for too long on the municipalities to back economic development.
“Not to be an alarmist, but I think we’re entering into a period in the United States where the strong cities are going to get stronger. And if you’re standing still, you’re moving back,” Smith said, naming Birmingham and Fort Lauderdale as making progress. Levy also frequently mentioned booming Nashville as a city on the rise.
“So I think we are at a moment where we have to decide whether we’re going to really double down on ourselves,” he continued. “I would encourage you not to think about that as ‘Who do we want to be like?’ Think about it as how can we be the best San Antonio.”