H-E-B plans $100 million investment around downtown store

The main entrance building at the H-E-B Arsenal Headquarters which opens up to a courtyard on the compound, Friday, Oct. 18, 2013. The main entrance building at the H-E-B Arsenal Headquarters which opens up to a courtyard on the compound, Friday, Oct. 18, 2013. Photo: BOB OWEN, San Antonio Express-News Photo: BOB OWEN, San Antonio Express-News Image 1 of / 44 Caption Close H-E-B plans $100 million investment around downtown store 1 / 44 Back to Gallery

SAN ANTONIO — H-E-B has disclosed plans for a $100 million expansion of its headquarters, a move that would double its downtown workforce by 2030 and transform the area just north of the historic King William neighborhood.

The master plan includes a grocery store, to be called Flores Market, at South Flores Street and César E. Chávez Boulevard.

While H-E-B previously said that store wouldn't happen without a $1 million incentive the city put on the table, the company now no longer is seeking the cash — and it's increased the size of the proposed market, from no more than 8,000 square feet to 10,000 square feet.

The company, however, still wants to see the controversial closure of South Main Avenue.

Chief Operating Officer Craig Boyan unveiled H-E-B's master plan in an exclusive interview with the San Antonio Express-News.

Years in the making, it includes several mixed-use buildings, new public spaces and a pedestrian and bike trail along South Flores between Chávez and Arsenal Street.

The redevelopment would encompass nearly 27 acres.

H-E-B would move about 1,600 workers to its downtown campus by 2030, essentially doubling its current workforce in the urban core.

“Our proposal is much more than just a downtown store,” Boyan said. “We think that we can help make South Flores and the San Pedro Creek a great street and a great redevelopment area in the city, perhaps like another Southtown.”

At a cost of about $40 million, the first phase of H-E-B's plan includes a culinary school and test kitchen, renovation of its 1601 Nogalitos St. location, the downtown store and a connected gas station.

It also includes construction of a 24-foot pedestrian and bike path, which, like Flores Market, could be completed within a year of city approval.

More Information 1. H-E-B headquarters: Officials say the grocer has outgrown its offices at its historic Arsenal campus, which it bought in 1985. 2. New H-E-B: The company plans to open a 10,000-square-foot store, dubbed Flores Market, and connected gas station within a year of approval. 3. Commander's House: The Commander's House, a city-owned senior center, could receive a facelift under H-E-B's plan. It wants to help open its front entrance along South Flores Street, allowing for more public access. 4. Multilevel office building: H-E-B plans to build a new corporate office, perhaps six to eight stories tall. 5. Pedestrian and bike path: To offset concerns over the closure of South Main Avenue, H-E-B proposed building a 24-foot pedestrian and bike trail. 6. Culinary center: Construction of a 10,000-square-foot culinary center, complete with a test kitchen, has begun. 7. Mixed-use buildings: H-E-B said three existing buildings could house more office space, retail tenants and even residential units. 8. South Main Avenue (proposed closure): The city will receive the results of a traffic study measuring the impact of a closure.

The second phase, with an estimated price tag of $60 million to $80 million, spans over the next decade and would add green space near San Pedro Creek, some mixed-use buildings just north of the culinary center and a new office building, perhaps with underground parking.

“South of César Chávez, Flores is not a great street, but it has great potential,” Boyan said.

In its original proposal,

H-E-B told the city it would build a 6,000- to 8,000-square-foot market, less than half the size of the requested 15,000- to 20,000-square-foot location.

While H-E-B has upped the store's footprint to 10,000 square feet, Boyan doubted the current residential population could support it.

He also questioned whether a grocery store would attract new downtown residents, as city officials hope.

“There's a fundamental chicken-or-the-egg problem here,” he said. “If we build it, will (residents) come? To be honest, we don't know the answer to that.

“It may or may not solve the chicken-or-the-egg problem, but we think it's just another one of those (amenities) that make living in downtown more attractive.”

Addressing criticism that Flores Market wouldn't be much larger than a convenience store, Boyan said it will offer prepared foods, dinner-to-go, a bakery and deli, fresh meat and produce, wine and beer selections, dairy and frozen foods.

“That is not a description of what you would find in a convenience store,” he said.

While Boyan encouraged the city to invest the $1 million grocery-store incentive into upgrades on South Flores, a city official said the grocery chain still could access other inner-city development incentives.

However, a spokeswoman said the company had no plans “at this time” to seek any new public subsidies, including property tax abatements.

Earlier this week, H-E-B representatives showed their master plan to members of the King William Association and San Antonio Conservation Society, the boards of which previously voted to oppose the closure of Main Avenue.

Critics have expressed frustration with the proposal, noting the street's importance to bicycle enthusiasts and also pedestrians who use the back entrance to the historic Commander's House.

H-E-B hopes the pedestrian and bike trail offsets those concerns and may increase traffic to the front entrance of the Commander's House, in addition to granting public access to a new corporate entrance on South Flores.

Until now, H-E-B honored a request from city officials to keep its plans under wraps, in hopes of avoiding the appearance that H-E-B unduly influenced the process, Boyan said.

However, critics have suggested that the company's demands for the closure of Main Avenue indicated it was in the driver's seat.

“In the absence of information, a bunch of people have jumped into the void, and there (have) been a lot of assertions and assumptions being made, many of which aren't really close to the truth or close to our goals,” he said.

“The assertion that we're trying to take advantage of people (or) take advantage of the city couldn't be further from the truth.”

In a phone interview, Mayor Julián Castro said he appreciated the fact H-E-B has reached out to its neighbors and revealed more about its intentions.

He called the master plan a significant economic development project and predicted the addition of 1,600 jobs to the area would have a ripple effect.

“That goes directly into our local economy (and) does have a spillover affect to the rest of the area,” Castro said. “I really believe what they're doing is a positive thing.”

Currently, the city is awaiting the results of a traffic study about the impact of closing Main Avenue. A firm should deliver its findings early next month.

Regardless, Castro hoped members of the community understood what was at stake with H-E-B's proposal.

“Imagine if we didn't have that in San Antonio, and we were looking at somebody saying they would put all of these jobs in the middle of downtown,” he said. “We'd be falling over ourselves for that kind of investment.”

nmorton@express-news.net