The Challenge
Spurs Sports & Entertainment (“the Spurs”) were in the planning and strategic decision-making phase for how to best proceed with the available developable land adjacent to and anchored by AT&T Center and the rodeo, as well as the potential catalytic impact it may have on the larger East San Antonio neighborhood. The team was actively evaluating its various options for the development of a mixed-use district and seeking guidance around when the adjacent development could be feasible and the preferred deal structure that is best to maximize both the arena experience and economic value of the land. In addition, the Spurs were interested in the relative opportunities in other submarkets in the San Antonio MSA that presented nearer-term opportunities for mixed-use development if they were to consider other arena locations. RCLCO was engaged as a strategic advisor to answer the questions set forth by the Spurs.
Solution
RCLCO began with a high-level assessment of the sites that were anchored by the AT&T Center and the rodeo as well as the general development trajectory of the East San Antonio submarket to understand the supply/demand characteristics that would govern the opportunity for each of the sites/submarkets in question. RCLCO then performed a multi-site triage to determine the target sites for development, ranking them on their opportunities for growth, presence of existing anchors, existing demographics, and other factors. Given this, RCLCO selected the two sites with the most development potential, and summarized the opportunity for a variety of land uses including rental apartments, retail, office, and hotel space. Finally, a financial analysis was conducted to determine the financial returns that would be realized as a result of these developments.
Impact
RCLCO’s analysis uncovered the opportunity for moderate returns for the hypothetical developments on the two selected sites, but also revealed a high level of market risk associated with the existing East San Antonio site that may limit its appeal for conventional market-rate development similar to other nationally recognized examples in the near term. RCLCO’s analysis helped the Spurs to determine a path forward, including what level of risk they would be willing to accept to move forward with their development goals.