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Bryan Leonard and Zar Haro discuss San Antonio’s economic growth with Texas Multifamily & Affordable Business

SAN ANTONIO, TEXAS (February 21, 2023) – Bryan Leonard, managing director – debt/equity, and Zar Haro, managing director – multifamily investment sales, of Northmarq’s San Antonio office recently spoke with Texas Multifamily & Affordable Housing Business in a story titled, “Investors Bank on San Antonio’s Economic Growth.” While the rest of the world seems to be bracing for a possible recession, San Antonio investors remain bullish, as long as they are ready to play the long game. As a young city with a growing job market and population, demand for apartments is high, especially in the context of being more affordable than neighboring Austin.

“The most active submarket concentrations are the Far West side of San Antonio, Northwest San Antonio and I-35 corridor markets like New Braunfels,” said Leonard. He noted that while the pipeline may be flush with future projects, new communities are still needed in San Antonio.

Haro pointed-out that most of the area’s multifamily inventory was built between 1970 and 1989, with a garden-style build. “This asset type is the most liquid due to the current value-add component and a receptive renter market that can’t afford new construction rents but still prefers a modern finish-out seen in renovated units,” he said.

Other topics covered include:

  • Renters Warm to Easy Lifestyle
  • Local Economy Stokes Confidence
  • Buyers Craft Debt, Equity Plays

Read the full story.

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Northmarq’s San Antonio investment sales team strengthens with addition of Brian Booth as senior associate

SAN ANTONIO, TEXAS (January 10, 2023) — Northmarq’s San Antonio investment sales office recently expanded by welcoming Brian Booth as senior associate. Booth will be responsible for sourcing and transacting multifamily investment sales in Central and South Texas. In his role as senior associate, he will work alongside the brokerage team to steward client assets. Additionally, Booth will coordinate with the two debt and equity experts also in the San Antonio office.

Prior to Northmarq, Booth served at Cushman & Wakefield in Orange County, California for over a decade, specializing in the representation of corporate occupier clients and the leasing and sales of office, industrial buildings, and land on behalf of local and institutional investors and developers. Over the past 11 years he has been instrumental in the execution of over $1 billion of leasing and sales transaction value for his clients. Booth is an expert in helping clients navigate and execute complex transactions across a wide range of industries.

“Booth has an extraordinary business development acumen and networking capability. We are excited to use our existing relationships and keep growing, it’s not everyday someone with his capabilities walks in the door. We’re thrilled to expand our market share together,” said Haro.

Booth served as president of the Orange County Chapter of Cushman & Wakefield’s Future Leaders (CWFL), a group within the firm that helps accelerate the advancement of rising professionals through continuing education, collaboration, communication, and community service. In 2020 he completed the prestigious Young Professionals Group (YPG) program through Southern California’s NAIOP (National Association of Industrial and Office Properties). He has served on NAIOP’s Fight Night Planning Committee from 2020-2022, the real estate organization’s signature annual networking event.

Booth has also served as a Board Member on the Mission Forward Junior Board of St. Joseph Health, an organization created with the goal of improving the health of the local community. His efforts as a Board Member supported mental health initiatives and programs for children and teens in Orange County.

Booth attained a Bachelor of Arts degree from Chapman University as well as a professional degree in Real Estate Finance, Investment, and Development from the University of San Diego.

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Bryan Leonard featured in Wealth Management Magazine: Pullback on construction lending likely to cut back industrial pipeline in 2023

SAN ANTONIO, TEXAS (January 5, 2023) – In spite of stellar property fundamentals remaining, both industrial developers and lenders are looking to play it safe on new construction, according to Wealth Management Magazine. In a story titled “Pullback On Construction Lending Likely to Cut Back Industrial Pipeline in 2023” the publication notes that the rapidly rising cost of capital in the commercial real estate industry will most likely reduce U.S. industrial starts to a seven-year low in 2023. This is likely to occur, despite a projected 10 percent growth in industrial rents.

Even with solid property fundamentals, the increased cost of debt and equity, along with ongoing discovery for land and asset prices, has made both industrial developers and lenders more cautious. Less well-capitalized developers, such as those specializing smaller, speculative projects, or those with focusing on tertiary sites face the biggest hurdles.

Northmarq’s Bryan Leonard noted in the article that “while industrial construction is expected to level off in 2023, this was a banner year for both industrial construction starts and deliveries.” He went on to add that high demand for space is keeping rental rates rising, which should provide developers some offset to higher interest rates.

Other topics covered include:

  • Regulatory Pressures
  • Construction Financing
  • Debt Funds
  • Construction Levels

Read the full story.

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San Antonio Q2 Multifamily Market Insights: Continued Population Expansion Supporting Property Operations


San Antonio Multifamily market report snapshot for Q2 2022
  • The San Antonio multifamily market continued to strengthen during the second quarter as vacancies tightened, and rents climbed higher. The pace of new development should accelerate in the second half of the year.
  • Apartment vacancy improved by 40 basis points in the second quarter; this marked the fifth consecutive quarter where the rate fell. Year over year, vacancy has tightened by 180 basis points, falling to 4.7 percent as of the second quarter.
  • Rents in San Antonio continued to trend higher in the first half of 2022, expanding by 3 percent to $1,135 per month. In the past 12 months, asking rents have surged by 11.3 percent.
  • Activity in the local investment market has accelerated. Year to date, the number of properties that have changed hands increased by nearly 50 percent from the same period in 2021. In transactions where pricing is available, the median sales price was $129,600 per unit. Cap rates averaged 4 percent in the second quarter.

Read the report

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San Antonio Q4 Multifamily Market Insights: Investment Activity Sparked by Strengthening Operations


San Antonio Multifamily market report snapshot for Q4 2021
  • A healthy rebound in hiring, particularly during the fourth quarter, supported the San Antonio multifamily market. Renter demand outpaced new supply, driving the area vacancy rate lower and fueling rapid rent growth. Additional economic expansion is likely in 2022.
  • Apartment vacancy in San Antonio dropped in all four quarters of 2021. During the final three months of the year, vacancy dipped 10 basis points to 5.2 percent. For the full year, vacancy tightened 150 basis points, reaching the lowest figure in over four years.
  • Asking rents increased at a rapid pace during 2021, advancing 11.4 percent to end the year at $1,102 per month. Rents advanced 3.6 percent during the fourth quarter, building on gains that had been achieved in the middle part of the year.
  • Investment activity surged in the fourth quarter, doubling sales from the previous period. The increased investor demand pushed prices higher while applying downward pressure on cap rates. In transactions where pricing was available, the median sales price closed out the year at $140,300 per unit, up 56 percent from the 2020 figure.

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San Antonio Q3 Multifamily Market Report: Vacancies Dip to Four-Year Low, Rents on the Rise


San Antonio Multifamily market report snapshot for Q3 2021
  • The third quarter proved to be a particularly strong period of apartment property performance in San Antonio, setting the stage for a healthy close to 2021 and a brightening outlook for 2022. The strengthening economy has sparked absorption of rental units and is the primary driver of the improving market fundamentals.
  • Vacancy dropped 120 basis points during the third quarter, falling to 5.3 percent. The rate is down 110 basis points year over year and has reached its lowest point since 2017.
  • The pace of rent growth gained momentum in recent months. Asking rents advanced 4.3 percent in the third quarter, and at $1,064 per month, are up 7.6 percent from one year earlier.
  • The local investment market sustained the momentum from the first half of the year. The pace of transaction activity continued to accelerate, while prices rose and cap rates continued to compress. In sales where pricing information is available, the median price has risen to $133,400 per unit.

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San Antonio’s Multifamily Investment Market Heats Up

SAN ANTONIO, TEXAS (September 30, 2021) – San Antonio’s rebounding economic drivers, growing population, robust renter demand and impressive rent growth are making the market a top pick for multifamily investors.

San Antonio’s booming target industries include the red-hot cybersecurity and information technology, life sciences and healthcare – key drivers for employment growth. Industrial and logistics, energy and banking also remain strong industries.

“We’ve seen a 10 percent year-over-year employment leap in higher-paying, white-collar jobs,” says Zar Haro, managing director of investment sales for NorthMarq’s San Antonio office.

San Antonio, in particular, is a top U.S. hub for cybersecurity, driving a robust economic recovery. Cybersecurity will continue to benefit from the expansion of the downtown campus of the University of Texas, ranked the nation’s top university for studying cybersecurity.

“San Antonio has always had strong anchor employers, and lenders looked to us for stability,” notes Bryan Leonard, managing director of debt and equity for NorthMarq’s San Antonio office. “However, these new industries driving the economy aren’t just providing good jobs, they’re fueling net migration and population growth, which is creating demand for housing.”

NorthMarq’s Market Insights Podcast

San Antonio’s Multifamily Investment Market Heats Up

Listen on Spotify.

San Antonio is one of the fastest-growing cities and attracts young people with its employment opportunities and affordability. Also, the surging single-family housing market triggered tight inventory and steep pricing, driving more people to rent.

To meet demand, apartment development has accelerated. “In the last 12 months, roughly 5,200 units were delivered, and the market absorbed 10,700 units – doubling demand,” Haro notes. Rent growth jumped an unprecedented 11 percent from 2020 to 2021.

These solid market fundamentals are boosting investment activity. “On the capital markets side, we’re as busy as ever,” Haro notes.

Transaction volume increased nearly 30 percent in the second quarter, and pricing rose 30 percent over 2020. Pricing trended between $83,000 and $115,000 per unit over the past decade. In the last year, 160 buildings traded at roughly $117,000 per unit. In the second quarter alone, trades were approximately $130,000 per unit. Haro says transactions totaled between $700 million and $800 million in the second quarter, nearly matching the total for all of 2019. “That kind of demand is pretty wild,” Haro adds.

Cap rate compression continues; it’s 4 percent to 4.5 compared to 5 percent to 5.5 percent in 2020.
Investors are flocking to the market. While it’s primarily private capital, more institutional players have mandates to increase their presence here.

Many lenders identified San Antonio as a preferred market. Approximately $2.3 billion in transactions were financed in 2020. “Eighty-five percent was by government agencies: 65 percent was Freddie Mac and Fannie Mae and 20 percent HUD. The remaining slivers were banks, insurance companies, and bridge or debt fund lenders,” Leonard notes.

With surging rent growth and demand, San Antonio is already at approximately $2.2 billion in financing volume and on track to finish roughly 25 percent higher than 2020. However, the composition of lenders is only 50 percent Freddie and Fannie, Leonard notes.

“So banks and bridge lenders have stepped in due to the rent growth and to support value-add acquisitions,” says Leonard.

Also, insurance companies are very interested in San Antonio and extremely competitive on low-leverage deals.
An abundance of capital remains available. “From the lending perspective, no one is turning off the faucet,” says Leonard.

A large supply of properties will become available, and rents will continue to grow very quickly, adds Haro. Cap rates will remain challenging, but investors are willing to take a less-than-ideal cap rate in exchange for hefty rent growth potential.

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San Antonio Q2 Multifamily Market Report: Cap Rates Compress as Sales Velocity Accelerates


San Antonio Multifamily market report snapshot for Q2 2021
  • Renter demand for apartment properties in San Antonio has been on the rise in 2021, pushing vacancy rates lower and driving rents higher. Construction remains active as developers move projects through the pipeline to meet demand.
  • Vacancy dipped 10 basis points in the second quarter, following an identical decline in the first three months of this year. Despite the improvement in 2021, the current vacancy rate of 6.5 percent is 30 basis points higher than the figure from one year earlier.
  • After holding steady for the past several quarters, the pace of rent growth surged in the second quarter. Asking rents rose 3 percent in the second quarter, reaching $1,020 per month. The recent gains pushed annual asking rent growth up to 3 percent.
  • Sales velocity in the local multifamily market gained momentum during the second quarter, with transactions picking up by nearly 30 percent. In transactions where pricing information was available, the median price has reached approximately $135,000 per unit, while cap rates have compressed to 4.4 percent.

Read the report

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San Antonio Q1 Multifamily Market Report: Sales Activity in Newer Assets Pushes Prices Higher


San Antonio Multifamily market report snapshot for Q1 2021
  • With property fundamentals stabilizing and investment activity strengthening, the San Antonio multifamily market got off to a
    strong start to 2021. The outlook calls for continued improvement, although the development pipeline remains full, and deliveries will be near all-time highs for the third time in four years.
  • The local vacancy rate dipped 10 basis points to 6.6 percent during the first quarter, the first quarterly drop in nearly two years. Despite the improvement in the first three months of 2021, the current rate is up 50 basis points from one year earlier.
  • Rents have been steady throughout the past several quarters. Asking rents inched higher to start the year, ending the first quarter at $991 per month, up 0.3 percent year over year.
  • Sales of apartment properties are ahead of the pace established in 2020, and pricing has trended higher. In transactions where pricing information was available, the median price spiked to approximately $145,000 per unit.

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Zar Haro among San Antonio Business Journal’s 40 Under 40 class of 2021

SAN ANTONIO, TEXAS (April 5, 2021) — Zar Haro, managing director of NorthMarq’s San Antonio office was recognized as one of San Antonio Business Journal’s 40 Under 40. The award is presented to professionals under 40 years old who have demonstrated excellence in business, leadership and community involvement during the last 12 months. Haro and the other winners were recognised at a virtual event on March 25, as well as featured in the San Antonio Business Journal.

Haro and is team are responsible for investment sales and capitalizations in Central and South Texas. In his nearly 15 years of experience, Haro has personally closed more than 300 multifamily investment sales and capitalizations.

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San Antonio Q4 Multifamily Market Report: Investment Activity Steady, Despite Construction Spike


San Antonio Multifamily market report snapshot for Q4 2020
  • Apartment construction in San Antonio was elevated in 2020, and the rise in new units put upward pressure on vacancy. Developers have been active in bringing new projects online to align with the area’s long-term demand drivers.
  • Vacancy crept up 30 basis points in the fourth quarter, ending the year at 6.7 percent. For the full year, the rate rose 70 basis points.
  • While several markets recorded rent declines in 2020, conditions were far more stable in San Antonio. Asking rents were essentially flat all year, finishing 2020 at $989 per month, up 0.6 percent from one year earlier.
  • Investment activity was very consistent during the second half of the year, and sales velocity in the fourth quarter closely tracked levels from the previous three-month period. The median price in 2020 was approximately $90,000 per unit, nearly identical to the median price one year earlier, while cap rates dipped 20 basis points on average to 5 percent.

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NorthMarq’s San Antonio office among Top Sales Broker and Top Sales Firms winners in CoStar’s Power Broker Awards

SAN ANTONIO, TEXAS (MARCH 17, 2021) — NorthMarq’s San Antonio multifamily investment sales team was named in two categories of CoStar’s Power Broker Awards. Zar Haro, managing director, and Moses Siller, managing director, were two of the six individuals from three different companies chosen as “Top Sales Brokers.” NorthMarq was also recognized as a “Top Sales Firm,” along with four other leading sales firms.

The CoStar Power Broker Awards recognize and celebrate commercial real estate’s top brokers and firms in the United States and Canada. Each year CRE professionals have the opportunity to submit their closed sale and lease transactions to be considered toward the Annual Power Broker Award. CoStar then verifies and analyzes thousands of deals submitted to identify winners in each market (based on cumulative deals; SF and PSF). Read more information on the methodology for determining winners of CoStar’s Power Broker Awards.

CoStar’s Power Broker Award winners can be found here.

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NorthMarq’s San Antonio office provides Community Housing Resource Partners with 2020 Community Involvement Grant

MINNEAPOLIS, MINNESOTA (December 22, 2020) — Community Housing Resource Partners has received a 2020 Community Involvement Grant from NorthMarq’s San Antonio office. The organization is dedicated to creating quality affordable housing where built-in social services empower low-income residents to reach independence and stability.

Founded by the Rev. Jerry Kalb in 1992, the organization began as a community effort to revitalize a residential property in the heart of Painesville, Ohio. In the 25 years since its founding, the organization has extended its outreach to San Antonio (the first property built in 2007) and Arizona (first property built in 2014) and recently celebrated its 25th anniversary in 2018.

“CHR Partners is one of the preeminent non-profit housing organizations in the city of San Antonio. As a borrower of Fannie Mae, Freddie Mac and FHA/HUD, the organization partners with many of our clients, and fits perfectly with the NorthMarq’s diversity initiatives and mission,” said Bryan Leonard, managing director – debt & equity.

“Many of our families have really struggled this year during the pandemic, and this donation will go a long way in helping us provide for their basic needs,” said Executive Director Constance Cooper.

In the third year of NorthMarq’s Community Involvement Grant program, the company has awarded grants to 18 non-profits in 16 cities. The program solicits nominations from each local office, and had an increase of 20 percent from 2019, with a total of 18 non-profits focused on affordable housing and reducing homelessness receiving these grants in 2020. NorthMarq’s 2020 grant to New Hope Housing represents its third award under the Community Involvement Grant program.

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San Antonio Q2 Market Report: Market Conditions Mostly Stable Through the First Half


San Antonio Multifamily market report snapshot for Q2 2020
  • The San Antonio multifamily market posted relatively steady results in the first half of the year. Rents are up, absorption has remained positive, although vacancy has inched higher in recent quarters.
  • Apartment vacancy rose 10 basis points in both the first and second quarters, with the rate reaching 6.2 percent, 60 basis points higher than one year earlier.
  • Asking rents finished the second quarter at $990 per month, 2.2 percent higher than one year ago. Rent growth has averaged nearly 4 percent per year since 2015.
  • Investment activity in San Antonio slowed during the first half of the year, reflecting trends recorded across most major markets in the country. In transactions where cap rates are available, cap rates have averaged 5.2 percent in 2020, nearly identical to levels from last year.

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Zar Haro participates in Peak Market Watch Panel: Why Secondary & Tertiary Markets Make It Easy To Achieve Double-Digit Returns for Multifamily Investors

Zar Haro, investment sales managing director of NorthMarq’s San Antonio office, was a featured speaker on Tuesday, September 29 for the Peak Market Watch webinar titled: “Why Secondary & Tertiary Markets Make It Easy To Achieve Double-Digit Returns for Multifamily Investors.” The hour-long event began at 11 A.M.

During the event, Haro explained what he is currently seeing with San Antonio, Corpus Christi, and Rio Grande Valley markets. Haro also broke down commercial property performances despite COVID-19 and the oil/gas slow down, how buyer interests are changing, impacts he is seeing from the changes in lending, as well as why secondary & tertiary markets make it easy for multifamily real estate investors to achieve double-digit returns!

Haro joined Anton Mattli – Peak Market Watch Show Host and Abel Pacheco – Peak Market Watch Show Co-Host for the conversation. Event details can be found here.

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Phil Grafe and Bryan VanCura join NorthMarq’s San Antonio Investment Sales team

SAN ANTONIO, TEXAS (July 25, 2020) – NorthMarq’s San Antonio office added to its Investment Sales team by bringing on brokers Bryan VanCura and Phil Grafe. As multifamily specialists, Bryan and Phil will be responsible for selling apartment buildings in Central and South Texas. VanCura will have specific focus on the San Antonio MSA, while Grafe will focus on Texas secondary and tertiary markets, including, Corpus Christi, the Rio Grande Valley, Waco, Temple, and Killeen. They will report to Managing Directors Zar Haro and Moses Siller, who joined NorthMarq last month.

“Bryan and Phil joining the team will be an immediate win-win. Their experience in San Antonio and Texas secondary markets will complement the robust client base Zar and I have already in the region. Adding two seasoned professionals will enable our office to hit the ground running, and cover more ground in the process,” said Siller.

Prior to joining NorthMarq, VanCura was an Associate for an affiliate Cushman & Wakefield office selling multifamily locally. Prior to brokerage, he worked for a non-profit, launching its presence in San Juan, Puerto Rico, and then serving as an area director in San Antonio.

A few of VanCura’s transactions:

  • Oaks on Bandera – 1171 Bandera Road, San Antonio, TX – 206 Unit Value-Add Property
  • Calder’s Corner – 2718 Old Field Drive, San Antonio, TX – 34 Unit Value-Add Property
  • The Vistana – 100 N Santa Rosa Street, San Antonio, TX – 247 Unit Class A High-Rise
  • Tara – 8051 Broadway Street, San Antonio, TX – 234 Unit Value-Add Property
  • The Arches – 215 Jackson-Keller Road, San Antonio, TX – 70 Unit Value-Add Property
  • Tahitian Apartments – 202 Birch Leaf Drive, San Antonio, TX – 48 Unit Value-Add Property

Prior to joining NorthMarq, Grafe worked on the JLL Capital Markets team specializing in multifamily. Phil was instrumental in working on advising clients on over 160 assets across San Antonio and Texas Secondary Markets.

A few of Grafe’s transactions:

  • Royal Vista – 5348 S Sugar Rd, Edinburg, TX – 144 Unit Class A Property
  • Bella Vista – 4305 E Ruben M Torres Blvd, Brownsville, TX – 272 Unit Class A Property
  • Residence at Edinburg – 4590 S Professional Dr, Edinburg, TX – 302 Unit Class A Property
  • Stoneleigh Harlingen – 905 N Loop 499, Harlingen, TX – 180 Unit Value-Add Property
  • Parkview Apartments – 5445 S Alameda St, Corpus Christi, TX – 224 Unit Value-Add Property
  • Corpus 2 Property Portfolio – Corpus Christi, TX – 446 Value-Add Portfolio
  • Bridgemoor at Killeen – 2710 Cunningham Rd, Killeen, TX – 180 Unit Value-Add Property
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NorthMarq continues Texas expansion with Investment Sales leaders in San Antonio

MINNEAPOLIS (June 9, 2020) — NorthMarq extended its multifamily investment sales depth in Texas with the addition of Moses Siller and Zar Haro as managing directors-Investment Sales in San Antonio. They will collaborate with NorthMarq’s Texas offices in Austin, Dallas, and Houston, to market multifamily assets and help clients identity the best financing structure. Last month, Scott Lamontagne joined NorthMarq as managing director – Investment Sales in Austin; the Texas multifamily investment sales platform also includes an eight-person team in Dallas led by Taylor Snoddy.

Siller and Haro previously worked for JLL’s Texas Multifamily group and provided a full suite of capital solutions, including research, advisory, transactional, debt structures, and equity sourcing, to private and institutional apartment owners and developers. The team has a long track record of investment sales business and capitalization, completing more than 300 transactions totaling $3.5 billion.

Trevor Koskovich, president-Investment Sales, leads the multifamily investment sales platform’s growth, and looks for professionals who are interested in leveraging the company’s entrepreneurial culture and debt and equity expertise. “Moses and Zar complement our other investment sales leaders in Austin and Dallas, and provide a perfect fit to NorthMarq’s culture of entrepreneurship and innovation,” he said. “I am excited to have such a great team join us as we build our investment sales platform across the country.”

Siller comes to NorthMarq after six years of multifamily investment sales with JLL, where he handled value-add and Class-A transactions. He also worked for Marcus and Millichap, where he started his brokerage career as an adviser with the Institutional Property Advisors group. In his nearly 15 years of experience, Haro worked for JLL as an executive vice president, in investment sales at Marcus & Millichap and as commercial debt and equity advisor at Meridian Capital, LLC in New York City.

Their recent transaction history includes:

  • Terravista Portfolio: A South San Antonio value-add multifamily portfolio that included five-properties comprised of 772 units
  • Lone Star Brewery Site: Future master planned, mixed use development site in the heart of San Antonio Southtown District.
  • Oakridge Apartments: A value-add multifamily asset with 216 units in northeast San Antonio
  • Tribute at the RIM: A new-construction, Class-A asset with 380 units

Siller and Haro will join the NorthMarq San Antonio office located at 70 N.E. Loop 410, Suite 285, and collaborate with Bryan Leonard, managing director – debt and equity in San Antonio, along with the debt and equity experts from Austin, Dallas, and Houston.

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Bryan Leonard participates in virtual San Antonio CRE Lending Update

Bryan Leonard, senior vice president/managing director of NorthMarq’s San Antonio office, joined Laurie Griffith, executive vice president of Texas Capital Bank San Antonio, for a webinar hosted by The Real Estate Council of San Antonio. Carrie Caesar, Cushman & Wakefield San Antonio senior director – Capital Markets – Private Capital Group, moderated the program.

The session, titled “San Antonio CRE Lending Update,” covered such topics as the “Economy at a Glance,” “What Lenders Are Active Locally,” “Local Property Types In and Out of Favor,” and “Interest Rate Indications for San Antonio.”

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Bryan Leonard discusses state of the market in San Antonio

Bryan Leonard joined four other NorthMarq Capital producers to discuss and answer questions regarding tertiary and secondary markets. He noted in his remarks “We expect that San Antonio will remain a dynamic and attractive investment market across the property type spectrum for both investors and lenders alike for reasons that have always held true—steady, measured growth absent of volatile peaks and valleys.” Read Bryan’s responses below.

1. What property type/niche are seeing/hearing about in your market? What conditions make this possible?
San Antonio has long been characterized as a very stable market and for good reasons. It has a diverse economic base, perceived high quality of life and a very reasonable cost of living. It was named as the number two place to visit in the world on a recent list published by Budget Travel and consistently ranks in the top 15 of US event destinations. Many people don’t realize it is the seventh largest city in the country.  In recent years, the San Antonio CBD has largely been a tourist destination but that is no longer the case. San Antonio’s CBD is undergoing a residential and commercial renaissance. For the first time since 1989, a new $142 million 460,000 sq. ft. office tower designed by the world renowned Pelli Clark Pelli architecture firm is under construction in the CBD. Numerous multifamily and entertainment venues have also been and are currently under development. Additionally, the suburbs are doing well and seeing a mix of office, retail and multifamily construction as one would expect given San Antonio was ranked sixth in population growth in the US among big metros last year. Housing starts continue to be solid and demand is outpacing supply with an estimated 3.4 months of inventory available according to local sources. We have seen many people relocating to San Antonio from other parts of the state and nation for work in recent years. These factors support healthy real estate markets locally in the broad sense. There does seem to be a niche in the affordable/workforce housing space in this market and several developers and local municipalities have capitalized on those opportunities. San Antonio is also a good hotel market given its strong position in the tourism industry.

2. What type of borrowers/lenders are in your market? For example; is it primarily agency or are bank and life companies also part of the mix? Why?
Borrower profiles in our market range from local to national, international and institutional. We do have quite a bit of interest and investment from investors located in California as well as the northeastern and southeastern part of the country. In the last several years, wealthy families with diverse business interests from Mexico have been significant real estate investors in San Antonio. It is a great relative value market when compared to the gateway markets as competition for product can translate into very thin investment returns. The San Antonio market offers investors stability with upside potential and real estate is still priced quite reasonably. NorthMarq is active with all lender types including life companies, agencies, CMBS, banks and other balance sheet type lenders in San Antonio. I would summarize by observing that San Antonio enjoys very good capital liquidity when it comes to the commercial and multifamily real estate markets and there is robust interest in investing here from a wide variety of investor types.

3.  What are the unique challenges facing your market?
Like many metropolitan areas experiencing strong growth, San Antonio is working to insure highway infrastructure keeps up with increased population and traffic. Our airport is undergoing an expansion with modernization. More frequent direct flights to key destinations will be important to future growth as well as the continued strong performance in the convention and tourism business. Our convention center is state-of-the-art and San Antonio is focused on continuing to be a leader in that very competitive industry. Like any growing city, strong pro-growth leadership will be necessary to perpetuate economic growth. We are fortunate to have a strong city manager as the city is in very good financial health and maintains excellent bond ratings. San Antonio is somewhat unique in that our water supply is derived from underground resources as opposed to surface resources. Long term plans to address and guarantee that resources will be plentiful for future generations are also in place and new avenues to supplement that plan are constantly being evaluated and implemented.

4. What are the unique opportunities present in your market?
San Antonio has a unique combination of resources and geography that contribute to its desirability. It has a culture unique to South Texas and a perceived high quality of life. As previously mentioned, the cost of living is low relative to many other places and weather is favorable in that winters are generally mild, making outdoor recreation very accessible just about year around. The economy is based on a diverse mix of industries such as tourism, import/export, manufacturing, healthcare and bioscience, aerospace, financial services and military. San Antonio is home to mission critical military bases and other governmental operations and is the epicenter of the burgeoning cybersecurity field. Due to the low cost of power and general lack of significant weather events, large data centers have located in San Antonio. For example, Microsoft recently purchased land to build a $1 billion facility that is in addition to two data centers they already occupy in San Antonio. We expect that San Antonio will remain a dynamic and attractive investment market across the property type spectrum for both investors and lenders alike for reasons that seem to have always held true here- steady, measured growth absent of volatile peaks and valleys.

Read the full story here.

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