San Antonio has been hard to ignore by national and international commercial and multifamily real estate investors on both the equity and debt side of capitalization. It has many of the positive ingredients that combine to score compelling marks in the various economic and investment models that are used to evaluate investment strategy.
NorthMarq Capital works with national and international debt and equity real estate investors raising capital for commercial and multifamily properties every day in our role as an intermediary. Factors consistently standing out that make San Antonio attractive are its economic foundation based on financial services, healthcare, government and tourism and includes industries as diverse as medical, energy, biosciences, cyber security and aerospace. San Antonio is a top travel destination and has experienced very healthy population growth. It has an affordable and business friendly environment along with a unique geographic location and high quality of life. These factors translate into positive sustained demand for real estate.
Several sources have given accolades validating the success the San Antonio economy in recent history. The Milken Institute named San Antonio as the No. 1 performing city in the country and emphasized the productivity and energy the city has had in recent years. Also, in recent years the city was one of the top six cities for growth, according to the Bureau of Labor Statistics. CNNMoney and Moody’s Analytics have also ranked San Antonio among the top 10 fastest growing cities in America.
Anecdotal evidence that investors have endorsed these factors is reflected by the level of institutional interest that is providing equity and debt capital to commercial and multifamily projects in this market. In 2012, nearly $1.5 billion representing more than 125 sale transactions were capitalized in the San Antonio market, according to estimates from Real Capital Analytics and Austin Investor Interests. That total does not include the very healthy refinancing activity or any construction activity that occurred. About half of the sales total was multifamily while the rest was a mix of office, retail, industrial and other property types. One of the larger financings occurring in 2012 was the approximate $50 million recapitalization of a local office campus by major national insurance and private equity firms based in New York City.
New construction successfully attracting capitalization is also occurring to meet current and projected demand. A combined 15,000 multifamily units are under construction or projected to start in the near term by major national investors such as NRP Group, Fluornoy, USAA Realco, Embrey and Prudential. Commercial office construction can be seen primarily in the corporate headquarters or major operational center buildings nearing completion such as NuStar Energy, KCI, Nationwide and Broadway Bank.
In summary, San Antonio’s growth and popularity is not lost on real estate investors and projections along with current activity suggest a long-term favorable outlook for profitability.
— Bryan Leonard, managing director of NorthMarq Capital’s San Antonio