Analysis: Downtown's growing in more ways than apartment, condo construction

by Ben OlivoJuly 14, 2019
The Soto, a six-story, timber-framed office building, is currently under construction at 711 Broadway. Photo taken July 12, 2019. Photo by Ben Olivo | Heron
The Soto is a six-story, timber-framed office building currently under construction at 711 Broadway. Photo by Ben Olivo | Heron

Editor's note: This is another analysis about downtown growth. The first, which you can read here, was about residential development.

This week I had to re-read our recent article about change in Government Hill, to clarify something. And as I was reading, an unrelated sentence in it, which I inserted as editor of the piece, made me cringe a little. It said:

"Since Ed Cross and David Adelman built 1221 Broadway, since Silver Ventures began developing the Pearl, since the Museum Reach was completed—all around 10 years ago—the mixed-use growth that has branched off from these early developments—a combination of residential, retail, hotel and, now, office space—shows no signs of slowing down."

I cringed because in an analysis last week I basically said the Decade of Downtown was either dead, or at least circling the drain. The lack of applications for the city's downtown housing incentive policy in the last six months could mean the program, which began in 2012, is slowing down. In a revised version of the policy, which the City Council approved in December, developers receive less incentives—i.e., less of a rebate on the city portion of their property taxes over 15 years—and also are required to include affordable housing when building on the outskirts of the downtown core—among other requirements.

Some developers see this "watered down" version of the program, coupled with rising construction costs, and other factors, as the reason residential developers aren't inquiring about incentives in the downtown area at this time.

It's easy, sometimes, to ignore what the bigger picture looks like because in downtown San Antonio, for the longest time, the bigger picture only included residential growth. But the truth is there are other types of development in play.

Hixon Properties and the Cavender family have partnered to build The Soto, a six-story, timber-framed office building at 711 Broadway. Ground was broken about a year ago, and now, if you drive by, you'll see the wooden lattice has started to take shape.

Pearl Office Tower Credit Human Headquarters
Credit Human's headquarters is currently under construction on Broadway next to the Pearl. Photo by Jullien Uriegas | Heron

Of course, there are the two office buildings currently under construction on Broadway, which include the future headquarters of Credit Human, just east of the Pearl. Credit Human received an incentive package from the city and county worth $8.8 million to make the move, the San Antonio Express-News reported in 2017. A stone's throw away, Jefferson Bank is planning to build its own headquarters on the northeast corner of Broadway and Grayson.

In that same area, GrayStreet Partners plans a mixed-use campus east of the Pearl, which it's calling Broadway East. Most of its other projects so far seem to be strictly adaptive reuse of existing buildings, and strictly commercial—mostly office with some retail. Look at the former San Antonio Light building turned office, the Kress and Grant buildings on East Houston Street turned office, and the refurbishing of the Travis Park Plaza building—all of which are in the middle of their refurbishing, and all of which received city incentives.

CPS Energy continues to build anew around the skeletons of the former AT&T towers on McCullough Avenue by the Museum Reach.

Weston Urban, which continues to accumulate land in west downtown, has mainly been in the commercial development business up to this point.

The just-completed Frost Tower by Weston Urban and KDC of Dallas is the most obvious example. It also renovated the Rand building, home to start-up incubator Geekdom, and other companies, and it's also emptied out the Milam building for future rehab.

We cannot forget the University of Texas at San Antonio and its plans to quadruple the size of its downtown campus the next 10 years. That is an epic, historic development that will undoubtedly impact the rest of downtown as well as the poorer residents of the near West Side.

Weston Urban has told the Heron whatever it builds on its west downtown properties would complement UTSA's efforts. They could be talking about student housing, but they could also be talking about new commercial space oriented toward students.

So, why is there so much commercial development happening now, even if most of it seems to be the reuse of existing buildings?

I'm not an economist, but it could be argued that the incentivized housing projects to date—64 either completed or in the works, according to the city—have created enough of a vibrancy to yield the new office construction, and other types, about to come online.

Perhaps those 64 projects begat the current commercial. And perhaps the current commercial will beget the next housing boom. Or not.

We'll know more as 2019 continues. About 18 months from now, the City Council is scheduled to reevaluate the incentive program, known as the Center City Housing Incentive Policy. We'll definitely know more at that time.

We're planning our own analysis to try to explain these fluctuations in growth and, of course, their impact on the nearby communities. Stay tuned.

Contact Ben Olivo: 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

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