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Analysis: Weston Urban’s high-rise tower 'blazes the trail' for downtown growth

by Richard WebnerNov 27, 2020
This lot next to the Milam building and Weston Centre could be a 32-story apartment tower by Weston Urban.
Weston Urban is planning a 32-story residential tower on this Soledad Street lot. Photo by Ben Olivo | Heron

Office buildings and hotel towers have dominated San Antonio’s skyline for decades, an all-too-visible reminder of the longstanding local struggle to draw housing to the urban core.

To the delight of many, Weston Urban is setting out to change that with its plan to build a 32-story, $107 million apartment tower on Soledad Street near Geekdom.

Little is known about the project—the company, backed by tech multimillionaire Graham Weston, has been mum about it since it popped up on the city’s Planning Commission agenda last week. It will have 351 apartment units, 7,250 square feet of retail space and a six-level parking garage. Construction is expected to begin mid-next year. That’s about it.

CITY OF SAN ANTONIO

Yet more can be said. For one thing, the tower would be the tallest residential building downtown by a long shot, bringing a style of high-rise urban living that most major cities can offer, but San Antonio cannot.

And the project indicates that Weston Urban, at least, thinks that the downtown real estate market is finally capable of supporting a high-rise. Last week, the Heron surveyed 19 of the 20 apartment buildings that have been built in the downtown area since the city created the Center City Housing Incentive Policy (CCHIP) eight years ago. The occupancy collectively stand at 86% for those properties.

"What people don’t appreciate is that decisions of this magnitude and this cost aren’t made without some really strong comfort that there’s a market for that type of unit," developer Ed Cross said. "This is really serious construction and complexity, and it is a big vote of approval on downtown San Antonio. People don’t do this stuff lightly."

When developers consider whether to risk millions of dollars on a certain project, they typically take a close look at the performance of similar projects nearby. But there’s nothing similar to Weston Urban’s proposed tower in downtown San Antonio. The closest thing is the 14-story, 250-unit Inspire Downtown, formerly known as the Vistana, which has done well since Cross and other investors built it in 2009. Last fall, they sold it to an investment firm from Los Angeles.

A 17-story tower, the Floodgate, is under construction on East Commerce Street. A couple years ago, Austin firm Teeple Partners planned to build a 21-story tower with 305 apartments across the street from City Hall, and even reached an incentive agreement with the city, but canceled the project after determining that it wasn’t feasible.

Last year, the San Antonio Housing Authority board of commissioners voted to pursue a partnership with JMJ of Dallas on twin, 24-story apartment towers kitty-corner to the Tower Life Building, but that mega project fizzled.

"In real estate, a lot of the time we look in a rear-view mirror to verify that you can build something that will be economically viable,” developer David Adelman said. “It takes a remarkable visionary to put that kind of capital to work, not knowing the level of success.”

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High-rises have proliferated in the downtowns of Austin, Dallas and Houston over the last decade, leading many to wonder why San Antonio can’t be blessed with so many construction cranes.

The tourism industry, which powers the downtown economy, makes it difficult to build apartments and condos because land owners and financiers think they can make more money on a hotel, developers say. For a residential project to be feasible, the investors have to be sure they can charge high enough rents to justify it.

Many of the land parcels downtown are small and irregularly shaped, and thus are hard to build on. And the abundance of open and cheaper land on the city’s fringes encourages suburban sprawl at the expense of urban density.

The hope is that Weston Urban’s tower will convince investors that such a project can be lucrative in downtown San Antonio.

“I think it’s going to greatly expand the market potential for multifamily in San Antonio,” said Peter French, the director of development for GrayStreet Partners. “Really, what it does is, it blazes the trail for people who are going to finance this kind of thing.”

Crews are prepping this site for The Floodgate apartment tower on East Commerce Street next to the Esquire Tavern.
Crews are prepping this site for the Floodgate apartment tower on East Commerce Street. Photo by Ben Olivo | Heron

The tower would be a trophy for the city after it spent the last 10 years stimulating the downtown housing market through financial incentives and close working relationships with developers. Former Mayor Julián Castro began the effort in 2010 when he proclaimed the "Decade of Downtown." In 2012, City Council created CCHIP, which has since awarded developers with more than $100 million worth of incentives, the bulk of which are breaks on city property taxes.

"Only recently has our downtown economy shown positive signs of being able to help support these types of high-rise developments," said Veronica Garcia, an assistant director with the city’s Center City Development and Operations (CCDO) department. "Maybe five years ago, a project like this may not have been possible. But as our downtown continues to have retail, restaurants, things that attract residents, and as we have those residents downtown, developers are seeing that it's a viable market."

Weston Urban is requesting CCHIP incentives for the tower, including a $1 million SAWS impact fee waiver and a 15-year local tax rebate, said Kelly Saunders, a spokeswoman for CCDO. Discussions are ongoing, she said.

Under the agreement being discussed, 25% of the rebate would be used to invest in "the future development of affordable housing," she said.

The city’s Planning Commission voted last week to let the project go forward. Its design will need to be approved by the Historic and Design Review Commission because it is in the city’s river overlay district, which upholds design standards near the river. The 0.87-acre site it would be built on is zoned for “downtown district,” which allows for mixed-use and residential uses and carries no height restrictions.

In 2015, Weston Urban reached a deal with the city that gave rise to the new 24-story Frost Tower and made it owner of large parts of west downtown, ranging from the stately Municipal Plaza Building where City Council meets to several run-down parking lots. The agreement required the company to build at least 265 housing units.

It has cobbled together other properties outside of the city land deal, totaling more than 20 acres in west downtown.

Randy Smith, Weston Urban’s president, told the Heron last year that the company planned to far exceed the 265 units it promised to the city.

"We will build multifamily down here until the market tells us to stop," he said.

Related
» Weston Urban plans 32-story apartment tower in downtown tech district
» Continental Hotel sold to Weston Urban for mixed-use project
» With Frost Tower finished, Weston Urban pivots toward housing
» Weston Urban purchases iconic Toudouze building, eyes synergy with UTSA expansion
» A glimpse at west downtown in 10 years
» More Weston Urban stories

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

Heron intern Brigid Cooley contributed to this report.

Contact the Heron at hello@saheron.com | @sanantonioheron on Twitter | Facebook

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