I-35 Corridor Growth
Q2 2021 San Antonio Office Outlook
In recent history, the cities of San Antonio and Austin have been on a collision course fueled by the major growth of both metropolitan areas. San Antonio is currently the seventh-largest city in the nation with Austin ranked at number 11. In the last year, the two cities ranked second and third, respectively, for year-over-year population growth. New Braunfels and San Marcos, two other cities along the corridor, have also seen economic and population booms. This continued growth leads many to believe that someday soon, possibly within the next ten years, the two cities will become one “mega-metro” area. According to the Austin Statesman, the current combined population of the two metros is just under five million people; that is expected to reach 6-7 million by 2030, and upwards of nine million by 2050.
This unprecedented population growth will need to be accommodated by major improvements to existing infrastructure to remain feasible. It is estimated that for every one percent increase in the area’s population, the congestion along I-35 increases by 3-4 percent. According to The Greater Austin-San Antonio Corridor Council, this congestion has a cost of over $1 billion every year to the area’s economy in lost time and wages. Measures are being taken to combat this increase in congestion along the I-35 corridor, but how effective it will be is yet to be seen. In April, Alamo NEX Construction was awarded a $1.5 billion design-build contract for the Texas Department of Transportation’s I-35 Northeast Expansion project, which will expand I-35 from near downtown San Antonio to Schertz. The expansion is set to begin in 2022 and is expected to take 6 years to complete, and will include adding HOV lanes, express lanes, and connector bridges at both the 1604 and 410 loops, as reported by The Texas Highway Man. Ferrovial Construction U.S. and Webber have previously partnered on over $6 billion worth of design-build construction projects across Texas. A similar project will soon be taking place in Austin, with the expansion of I-35 through the city center, which is currently ranked the 15th most congested roadway in the U.S.
As for the other cities along the corridor, things are continuing to look up as well. New Braunfels Utilities has pledged $550 million of capital projects over the next five years to improve the infrastructure of their electric, water, and wastewater systems. An additional $117 million of funding through a bond package that was passed in 2019 will be flowing through the city also, $44 million of which is going directly to transportation and infrastructure improvements. The New Braunfels airport, which has seen a 24 percent increase in operations as well as a significant increase in flight activity, as stated in the San Antonio Business Journal, was recently designated as a national airport by the FAA. The new designation could possibly help the facility receive additional federal funding as part of the Airport Improvement Program, and help the city look more attractive to businesses looking to expand or move. TaskUs Inc., a customer service outsourcing company, has done just that. The company recently moved its headquarters to New Braunfels from Santa Monica, California, just before making the announcement that it planned to go public via an IPO in which the company would look to raise over $300 million. The other city along the corridor, San Marcos, saw a 44 percent increase in job growth and a 45 percent growth in the labor force in the 10 years from 2008-2018, the Austin Business Journal reports. The growth of Texas State University as an emerging tier one research institution, along with the relatively low cost of land, existing infrastructure, and buildings gives San Marcos its own competitive advantage when it comes to recruiting companies and investments to the area.
The diversification of economies along the I-35 corridor represents a unique, yet complementary, set of opportunities that continues to attract individuals and businesses to the area.
Download the Q2 2021 San Antonio Office Market Report