Accolades

$20 million spec-space development planned
San Antonio Business Journal
by Tricia Lynn Silva

Hank Pruitt of locally based Pruitt Realty Services recently announced that Dallas based CMC Commercial Realty Group has begun construction on a total of 155.703 square feet of speculative space - to be located in the master-planned business project University Park.

Construction began last week on what CMC is calling University Park Tech Center V says Pruitt, whose firm is the exclu sive broker for CMC's projects here. The building will total 80,431 square feet, and is set to come on line in August. About 90 days from now, CMC will start November.

University Park is located at Interstate Highway 10 and De Zavala Road, in Northwest San Antonio. CMC's project is known as the University Park Tech Center and is located off of IH-10 and Northwest Parkway - within the larger master planned community.

Tech Centers V and VI fall into that style of space commonly referred to as tech center projects. The buildings will be fin ished out 100 percent as office space, says Pruitt. But the buildings will also have dock-high loading and 18 foot clear heights - amenities typically found in industrial buildings.

Total costs to develop Tech Centers V and VI: approximately $20 million, Pruitt adds.

"This is not a little project." he adds. "No one is going to just jump right out and do that".

What they want

Indeed, given the state of San Antonio's office and industrial markets, it is a rare event to find a developer willing to venture out with a spec project.

The Washington-based Society of Indus trial and Office Realtors (SIOH) painted a lackluster view of the city's office and industrial real estate markets in recent reports.

are likely to continue this year as well, according to SIOR As a result, the SIOR review projects that spec ulative construction will be limited.

Meanwhile, the industrial market hit a low ebb during 2003, according to SIOR's year-end report for this sector. Projects in the central business district posted a vacancy rare of 6.38 percent at the end of 2003; in the suburbs, the vacancy figure was 11.02 percent.

And despite the good news about Toy ota's plans to open a plant here, develop ment regulations stand to push more development outside of San Antonio going into 2004, the SIOR report states.

The reports were compiled by members of the local SIOR chapter.

So, why CMC? And why now? The goal. says Pruitt, is that Tech Centers V and VI will be completely - or at least significantly - leased by the time they come on line later this year.

That goal is not all that far-fetched. To date, CMC has developed more than 640,000 square feet of space in San Antonio. University Tech Center accounts for about half of that portfolio - a total of 358,532 square feet of product that is currently 100 percent occupied.

Our product acceptance has been high," says Pruitt. "We're building what the market wants."

CMC's projects, Pruitt adds, offer the flexibility and efficiency that corporate America. Is looking for these days. The clear heights of these buildings and the dock-high loading allow for some industri al functions, such as light distribution. They are, however, finished-out to project a more corporate image.

And the large floorplates are a major plus, Pruitt continues. All the buildings in the Tech Center are single-story, which means that with a building like Tech Cen ter V. Pruitt and CMC have the ability to offer a single floor-plan of over 80,000 square feet.

"That's like taking (one of San Antonio's traditional high-rise offices) and turning it sideways," Pruitt adds.

Strong track record

It's also hard to compete with the rental rates of CMC's projects. According to the latest SIOR report, lease rates for tech buildings here range from $7.20 to $13.50 per square foot. That's quite a difference from the lease rates of traditional office projects.

Depending on the location and age of the properties, lease rates in the local office market run as low as $11 and as high as $25 per square foot, the SIOR report states.

"(Developers like CMC) are putting something on the ground that is multi-use in nature - with drive-up parking and good ingress and egress," says John A Colglazier Sr. of NAI/Colglazier Proper ties and a member of the local SIOR chap ter. "(The tech centers) are a way to beat the expense and trouble of a high-rise office."

As for CMC's success here, Pruitt says that much of it is due to the fact that the company understands both the industrial and the office market - and thus how to deliver a product in demand by tenants in both sectors.

"We take our knowledge from both of those sectors," he adds. "We're doing the right thing. We're building what the ten ants are looking for, what the market wants."