San Antonio has a diversified, growing economy and continues to add jobs. One of my favorite sectors as it relates to rental properties is the healthcare and biotech industry. Until recently, hospitals were located mainly downtown, and biotech, research, teaching hospitals, and other medical facilities were concentrated on the northwest part of the city at the South Texas Medical Center.
The Medical Center area has long been one of the best areas for rental properties because it attracts prospective tenants with well-paying jobs as well as students and interns the University of Texas Health Science Center. Methodist Hospital, Christus Santa Rosa, and ancillary clinics and doctors’ offices are clustered in the area, which continues to expand north. The South Texas Oncology and Hematology and South Texas Accelerated Research Therapeutics are working together on the construction of a cancer treatment and research facility, with the planned opening at the end of this year. Other major employers, such as USAA and Valero Oil, are located nearby, as is the University of Texas at San Antonio, the second-largest UT campus.
But the gigantic planned community of Stone Oak is rapidly adding to its offerings of medical facilities, too. The new Methodist Stone Oak Hospital, set to open in the spring of 2009, will serve an area with a higher-income demographic in general than the Medical Center. Tenants are filling up the 81,000-square-foot Plaza at Concord Park in Stone Oak. In addition, construction on the first medical office building in Agora Palms, a 69-acre mixed-use development next to Methodist Stone Oak Hospital, is under way.
The major difference between the two areas is in price. Many of the neighborhoods around the Medical Center are made up of older (than 20 years) and/or smaller (than 1500 square feet) homes that are priced at or under San Antonio’s median price of $150,000. They are in Northside Independent School District, a well-regarded school district, as well as the fourth-largest in Texas. Over the last few months, single-family homes in the area of the Medical Center/UTSA/USAA have sold for $100,000 to 7 times as much for homes near the prestigious Oak Hills Country Club. The average sold price is $160,000, and the median sold price is bang-on San Antonio’s median of $150,000.
The Stone Oak community is in North East Independent School District. The property tax rate in North East is a little higher, and (possibly as a consequence) there are more schools rated exemplary by the Texas Education Agency here than any other school district in San Antonio. In the last few months, the homes in Stone Oak (a much smaller market area than those around the Medical Center) ranged in price from $140,000 to the $600,000s, with an average sold price of $258,000 and a median of $249,000, and were brand-new to 20 years old.
An alterative to the high prices in Stone Oak, but still close to the medical facilities, is the Encino Park group neighborhoods located just on the other side of the east boundary of Stone Oak. Sold prices range from $140,000 to the high $300,000s, with the average being $221,000 and the median sold price $201,000. They are also located in North East school district, and range in age from new to the mid-20s, with most being under 10 years. Growth is continuing north along Highway 281 and new-home prices per square foot are naturally higher than those for resales, making these homes in an established neighborhood attractive.
Single-family homes tend to be located along a spectrum from income at one end to capital gains at the other. If you’re strictly interested in cash flow, you may want to stay with the Medical Center area. In the middle of the spectrum, you could head farther west into the general area of Northwest Crossing and Braun Station, the attractive established neighborhoods that can also appeal to tenants from Lackland AFB to the west. If you want more high-income tenants, growth, and future appreciation, Stone Oak might be what you’re looking for, with Encino Park being in the middle of the spectrum.
Next time, details on the Cibolo/Schertz and the growth corridor along IH 35 towards Austin. However, if you have questions about any of these neighborhoods in the meantime, just send me an e-mail. I’m here to help you meet your real-estate investment goals.
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Disclaimer: These reports reflect the views and opinions of the Advisors and are not necessarily the views and opinions of NARREIA.
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