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4 Ways San Antonio Can Outshine Austin

San Antonio's development surge—including Downtown's first grocery store and the first new tower in 30 years—are among the reasons why the state's second-largest city is gaining traction. Avison Young San Antonio managing director Marshall Davidson Jr. gives us four trends leading to San Antonio's growth.

1. Development Boom


After decades without any major commercial construction, San Antonio is seeing a new commercial development boom across all product types driven largely by a 3.2% unemployment rate, after averaging under 4% for all of 2015, Marshall tells us. The San Antonio metro area had lacked development, in part, because of a lack of institutional purchases of leased properties, coupled with anemic rents and vacancies but all of that is changing rapidly as a result of increased institutional buyer demand, he says. 

2. New Frost Bank Tower


Last year brought the Frost Bank announcement of a new 400k SF office tower in Downtown (the first downtown office tower built in San Antonio in 30 years). A collaboration between Frost Bank and Weston Urban, the project will be designed by renowned architects Pelli Clarke Pelli with a 2018 or 2019 delivery. The new tower will likely be a catalyst for surrounding development, much like what happened in Austin when the Frost Tower was built there in 2004. These two office towers represented the first multi-tenant high-rises to be built in decades, and were followed by a succession of new residential and commercial development. For commercial real estate experts in San Antonio, the new Frost Tower signifies a new era of office development for the region.

3. Austin Tech Overflow


San Antonio is also seeing some Austin tech companies growing their support staffing in San Antonio, where the occupancy cost is literally half what it is in Downtown Austin, and talent is still available, Marshall tells us. The HQ element and the software developers still remain in Austin but some CFOs understand the reduced occupancy costs of a regional office play make it hard to pass on the savings only 72 miles south and in the same regional MSA. 

4. Amazon Bridging The Cities


The decision by Amazon to open a second fulfillment center between Austin and San Antonio confirms the increased momentum in the Austin-San Antonio corridor that's leading to the two cities for consideration as one economic powerhouse—similar to what has happened to Dallas and Fort Worth. DFW was the combination of two regional cities that became one large MSA. The 1.2M SF Amazon facility in Schertz came first, and San Marcos has approximately 855k SF under construction. Marshall says it’s not beyond the realm of possibility to one day see the Austin-San Antonio corridor referred to as ASA.