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 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.
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.
