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Development firm Weston Urban is planning to build a 32-story apartment tower with retail space on the west side of downtown, speeding up the transformation of what had been a sleepy corner of the center city.

The project is expected to cost more than $107 million, with construction potentially starting in mid-2021 and wrapping up about 24 months later.

The planned tower marks tech multimillionaire Graham Weston’s shift to downtown housing after pulling off several significant office projects.

His namesake Weston Urban has been working to create an entrepreneurial scene along Houston Street, with startup investment firm Scaleworks and co-working space Geekdom moving into two of its buildings. The firm also finished the gleaming $142 million Frost Tower last year and plans to refurbish the historic Milam building on East Travis Street.

It has snapped up more than 20 acres of downtown real estate.

The proposed tower at 305 Soledad St. — currently a 0.87-acre parking lot — would include 351 apartment units, about 7,250 square feet of retail and six levels of parking with 456 spaces, according to information that Weston Urban provided to the city’s Planning Commission. The commission will vote Wednesday on issues related to rights of way.

It’s unclear how tall the building will be. But its 32 stories would place the tower among the tallest structures downtown by that measure: The Marriott Rivercenter is 38 stories; the Grand Hyatt, 34 stories; and the Weston Centre, 32 stories.

At 750 feet, the Tower of the Americas remains the city’s tallest structure.

Weston Urban CEO Randy Smith said it was “far too early” for him to “have any meaningful comment” on the tower project.

The firm is required to build housing units under a deal it reached with the city and Frost Bank in 2015, when the City Council gave the green light to a public-private partnership among the three parties.

However, Weston Urban’s Soledad Street tower project doesn’t appear to be part of the agreement.

The city agreed to buy and renovate Frost Bank’s old headquarters and consolidate city employees there. In return, Weston Urban committed to building at least 265 housing units on property it purchased from the city and the San Antonio-based bank.

This summer, council members approved the sale of the former Continental Hotel building and a parking lot at 322 W. Commerce St. to Weston Urban for $4.7 million. The firm plans to build 274 apartments there, with half reserved for residents earning 80 percent of the area median income.

Demand for downtown apartments is expected to boom as students and employees flood the urban core.

The University of Texas at San Antonio’s planned Downtown Campus expansion and the San Pedro Creek Culture Park will reshape the west side of downtown.

To the east, Credit Human and Jefferson Bank are moving their headquarters near the Pearl, and GrayStreet Partners is planning a mixed-use development across Broadway from the Pearl as well as a nearby hotel and office tower. A flurry of housing projects also is in the works.

But the downtown apartment market isn’t close to becoming overbuilt, said Ernest Brown, vice president of investments at Rohde, Ottmers & Siegel Realty. Plenty of people, he said, are still looking to move to the inner city.

Yet building downtown — whether it’s residential, office or retail projects — is more expensive than it is in other parts of San Antonio. Land costs more, and there aren’t many acres of it available.

“Location, visibility and access are more critical,” Brown said.

“I think it’s fairly measured,” he said of the pace of downtown development. “When you look at all the other areas of growth around the city, I would say the growth downtown is measured.”

The downtown, Southtown and Brackenridge submarket includes about 8,613 residential units, according to Houston-based ApartmentData.com.

While the average occupancy rate didn’t change much between October 2019 and October 2020, the pandemic is putting a damper on rent prices, said Cindi Reed, regional vice president for ApartmentData.com. The average rental rate for upscale Class A properties fell from $1.80 a square foot in January to $1.70 last month.

With restaurants, bars and other attractions still closed or operating with limited hours, living in the inner city isn’t as appealing, and property owners are having to make concessions on rents and amenities.

Also, four housing developments are expected to open in the next few months, which will increase competition for tenants, potential pushing rents down further, Reed said.

An additional 23 projects, totaling more than 6,000 units, have been proposed for downtown, but developers could push them back if the economic fallout from the pandemic worsens. Still, Reed is optimistic about the future.

“Downtown areas are getting hit the hardest, but I do believe (they) will rebound,” she said. “There’s high hopes for the downtown area.”

With so many projects in the works, she added, “Now we sit back and watch.”

Publication: San Antonio Express News

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