Floodgate apartments promise San Antonio luxury at Boston prices

Local developer Keller Henderson formerly planned to build a 10-story apartment building, but increased the height to 15 stories after perceiving the strength of downtown’s multifamily market. Local developer Keller Henderson formerly planned to build a 10-story apartment building, but increased the height to 15 stories after perceiving the strength of downtown’s multifamily market. Photo: / Photo: / Image 1 of / 35 Caption Close Floodgate apartments promise San Antonio luxury at Boston prices 1 / 35 Back to Gallery

The San Antonio real estate market may be entering another stratosphere of luxury rental living — months after the Cellars complex at The Pearl tested whether San Antonio renters can support $14,000 monthly leases.

A new apartment complex on the River Walk, the Floodgate, is set to rent units out at an average price of $4 per square foot, which would make it the priciest apartment building in San Antonio. The rent is on par with average rents in Boston — the third-most expensive city behind San Francisco and New York for rentals in the U.S., according to the 2017 Rental Affordability Index by U.K. website Nested.

The luxurious Cellars opened last spring with an average rent of about $3.14 a square foot, according to rental housing research firm Austin Investor Interests. Upscale complexes such as the Agave Apartments in Southtown and others in The Pearl area often have rents at around $2 a square foot.

“We feel the community could absolutely support this,” said the developer, Keller Henderson, citing its location on the River Walk on East Commerce Street, the renovation of Hemisfair, new hotels being built nearby, and downtown’s strengthening office market. “We feel we’re poised in the exact center of all this activity.”

The Cellars complex has filled up fast, and some apartment units in downtown, on lower Broadway and in the Alamo Heights area rent for more than $4 a square foot, Henderson said. The Floodgate will feature amenities such as a rooftop pool and terrace, a spa and concierge services, he said.

Henderson has decided to raise the $30 million building’s height from 10 stories to 15 because he believes that downtown’s multifamily market is becoming stronger, he said. The number of apartment units has remained about the same, but he has increased their size so that the units will range from 900 to 2,400 square feet, he said. The building will include three stories of retail, including restaurant space on the River Walk.

The average rent for high-end apartments was $1.28 a square foot in the local market at the end of last year, and $1.68 for the downtown area, according to Austin Investor Interests, a firm that analyzes San Antonio’s multifamily market.

For a long time, rents at $2 a square foot were considered the top of the local market. The 122-unit Cellars complex broke new ground when it opened in May; amenities such as a rooftop pool and professional wine storage, great views of San Antonio’s skyline and access to The Pearl’s culinary scene allowed it to charge rents as high as $13,975 a month for a 3,986 square-foot penthouse suite, or $3.51 a square foot.

At that time, the second most expensive complex in San Antonio was Agave Apartments on the border of downtown and King William, with rents of $2 a square foot.

“Five years ago, if you told me you could get $2 a square foot rents in San Antonio, I would have sent you to the funny farm,” Brad Miller, president of Dallas-based Encore Multi-Family, told the Express-News in December. Encore is building a 338-unit complex in south downtown where rents will average about $2 a square foot.

Tim Barton, chief executive of JMJ Development of Dallas, said he doesn’t think Henderson will have trouble finding 53 tenants willing to pay high rents to live at a prestigious address. JMJ is building a 28-story apartment tower on the River Walk where rents will likely be around $2.40 a square foot, he said.

“Why does he price it at double the market? Because the people who want to pay it are the people who want that level of luxury,” Barton said. “The tenant wants that status: ‘I live in the most expensive apartment. I live in the most exclusive location.’… Based on the wealth I see in the city, are there 53 people? I think there are.”

Henderson said he’s in talks with three financial institutions that are “very interested” in funding the Floodgate. The building will also be financed with private equity from a family that has owned the property since the 1970s, he said.

The project has received conceptual approval from the city’s Historic and Design Review Commission and will have to return to the commission for final approval. Henderson expects construction to begin in six to nine months and to last 18 months or two years.

rwebner@express-news.net

@rwebner