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As San Antonio Grows, So Does Its Confidence

In the last decade, companies have flocked to San Antonio, making it an economic center rivaling Houston and Dallas, and rattling the Alamo City's pre-existing inferiority complex.

The San Antonio Riverwalk looking south from the Commerce St bridge, Thursday, December 22, 2011.

SAN ANTONIO — In 2008, after 15 years as the Alamo City’s largest corporate resident, AT&T announced it was moving its headquarters to Dallas — and taking 700 executives along with it. In the past, that San Antonio’s first Fortune 500 company had outgrown its home might have seemed an insurmountable blow for this city with a pre-existing inferiority complex. But these days, it is not easy to shake the city’s confidence.

In the last decade, companies have flocked to San Antonio, making it an economic center rivaling Houston and Dallas. With that business expansion has come energetic population growth: According to U.S. census numbers, in the past 10 years, San Antonio has added more people within its city boundaries than any other major city in the state. It has all attracted demographers’ attention, at home and across the nation.

“San Antonio is sometimes seen as that sleepy southern city of Texas,” said Steve H. Murdock, a former director of the U.S. Census Bureau and the Texas state demographer. “If you look at its growth, if you look at its changes in the last two decades, it is a city that may be changing more in nature than the other two larger cities.”

San Antonio recently topped the Milken Institute’s annual list of the best-performing cities, a ranking that measures American metropolitan areas based on their ability to create and sustain jobs. The city, which for the past five years has made it to No. 7 among the largest metropolitan areas in the country, has been “incredibly resilient” in the economic downturn, said Kevin Klowden, an economist with Milken, a California-based economic think tank.

Houston and Dallas, ranked fourth and ninth respectively among the top cities in the country, have seen their development gradually slow. And the jobs that those cities have added, Klowden said, have tended to be lower paying. By contrast, San Antonio has attracted high-wage jobs, capitalizing on its booming medical research industry.

“This is San Antonio’s finest moment,” said Henry Cisneros, the city’s former mayor and the secretary of housing and urban development in the Clinton administration.

Part of that is good fortune. The 2005 Base Realignment and Closure proposal, which consolidated military bases across the country, has greatly benefited San Antonio’s Air Force and Army bases. It has brought more than 10,000 jobs and $13 billion to the city’s economy, according to numbers from Joint Base San Antonio, which includes the country's largest military battlefield health and trauma hospital. That comes as the University of Texas Health Science Center to the north is rapidly growing, adding more than 225 new faculty members a year and deploying more than $230 million in annual research financing.

Cisneros, who is now the founding chairman of BioMedSA, a nonprofit organization of community and business leaders that promotes medical research in the city, said the current momentum in San Antonio has been a long time in the making — a result of “about 40 years of refining and honing economic cooperation.”

He said that in addition to its thriving medical research community, the city is poised to benefit from the South Texas Eagle Ford Shale energy boom, the relocation of Mexican professionals with significant capital to invest, increased tourism because of extensive civic improvements and a growing aerospace industry.

San Antonio aggressively courts the business of top companies. The city is home to the world headquarters of Valero Energy, Clear Channel Communications, USAA and H-E-B supermarkets. In recent years the city has focused on luring biomedical firms. InCube, a life sciences research lab, chose San Antonio over Houston and Dallas for its first expansion outside of Silicon Valley. It joins Medtronic, a medical technology company, as the two latest bioscience firms to move to the city.

Mir Imran, InCube’s chairman and chief executive, said that after learning about the medical research institutions, universities and military bases in San Antonio — and after receiving a $10 million economic incentive grant from the city — he was sold.

“San Antonio is the best-kept secret in Texas,” he said. “I don’t think it will stay that way for very long.”

The pending multibillion-dollar reduction in federal military spending triggered by the failure of the congressional “supercommittee” to make a deal on the budget is a possible wrinkle in the rosy prognostications. Lawmakers have vowed to propose legislation to undo the cuts, but no matter what, military spending will most likely fall with the return of American troops from Iraq and Afghanistan.

Population by Census Tract in San Antonio Metropolitan Area - 2000 to 2010
By Rate of Growth
Source: U.S. Census Bureau | * People who identify as having a Hispanic origin can be of any race.
Population by Rate of Growth in Greater San Antonio Area - 2000 to 2010
  Less than -50%
  -50% to -25%
  -25% to 0
  0 to +25%
  +25% to +50%
  Greater than +50%

Klowden of the Milken Institute said that San Antonio’s growth has been diverse enough that it may be able to avoid any debilitating effects from a reduction in federal spending. He added that even as troops return, they will probably be funneled through San Antonio’s bases as they head home.

Training an educated workforce, a challenge cited by both Imran and Cisneros, may be a more daunting obstacle for a city that has long struggled with high dropout and low college completion rates.

Like cities across Texas, San Antonio is becoming more Hispanic, a group that in Texas has had lower educational attainment rate. It is crucial for the city to find ways to reach the undereducated and poor, Cisneros said.

In the meantime, Imran acknowledged that he has had to recruit executives from outside San Antonio because he could not find them in the city. But he said it was little struggle to lure employees to live there.

“Once someone comes there for an interview, it’s not that difficult to convince them to move there,” he said. “The housing market is attractive, and it’s a great place to raise a family.”

AT&T is a corporate sponsor of The Texas Tribune.

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