What's Triggering Downtown San Antonio's Rebirth
San Antonio is more than halfway to the city’s goal of 7,500 housing units in the Downtown area, with about 4,300 units either opened, under construction or in the planning stages. It’s part of the exciting growth and one reason we’re excited to host Bisnow’s annual San Antonio State of the Market event on Oct. 1 at the St. Anthony.
San Antonio assistant city manager Lori Houston (a panelist at the event) says the Downtown area is a 5.2-square-mile area that extends from the Pearl Brewery to Southtown to the UTSA Downtown campus to Sunset Station. That's the target for the city’s housing first strategy. The idea: increase the residential population Downtown. With the increase comes disposable income that supports neighborhood retail. People want to live near where they can shop and get services necessary to support their lifestyle and this creates a place where employers will want to office. Then, the cycle would come full circle as Millennials want to live in an urban environment, which will diversify San Antonio’s workforce and enhance our overall economic competitiveness, she tells us.
Their efforts appear to be working. US Census Bureau population estimates show that San Antonio experienced the biggest jump in Millennial population from 2010 to 2013 with 9.2% growth. San Antonio’s Millennial growth outpaces Houston, Austin and Dallas.
Lori tells us the city is also prepping to embark on the redevelopment surrounding the Alamo. The state approved $32M to go toward improvements to the Alamo and surrounding area and the FY ’16 city budget includes $17M for the Alamo. Additionally, an endowment was created to raise private dollars to help in the project, too. Once the master plan is complete, implementation of the plan can start immediately, Lori tells us.
LYND CEO Mike Lynd Jr. (a panelist at our event) is concerned about risks from interest rates and oil, so he’s being very careful and selective about what he builds and where. The market is reacting differently to supply by location, he tells us. Urban areas will have the strongest absorption, Mike predicts. One hot spot is The Rim, where Lynd broke ground this month on a 380-unit community right behind Bass Pro Shops. There are a couple of multifamily projects in the works there, but Mike believes his is the best-located, right in the middle of retail, restaurants and nightlife.
Mike says the Rim is the first real mixed-use environment in San Antonio that has an everyday component. Other mixed-use projects are fun, but they don’t have grocers, hair salons and a cheap sandwich shop to run by on Saturday afternoon. The Rim Apartments will deliver in the first half of 2017. The urban wave has just started in San Antonio, Mike tells us. Most of the demand in those areas has been one-bedroom units, but he thinks it will start to balance out. Young people tend to lead the way into new areas, but older people and families want the urban lifestyle, too.
On the other hand, there have been a lot of suburban multifamily projects delivered lately, which has weakened those areas. That’s especially true on the I-10 Corridor, where rents had been close to $2/SF before additional supply softened fundamentals. The same is true for some popular urban markets. Rents and activity in the Broadway Corridor have been impacted by road construction there, but Mike’s still bullish on the area. Occupancy has stayed in the mid-90s, and he thinks Broadway is in the early innings of its growth. Pictured is 1221 Broadway, which LYND manages.
Join us for Bisnow's annual San Antonio State of the Market event on Oct. 1 at the St. Anthony. Register here.
