USAA leaving its downtown offices
Move will worsen vacancy rates on rise after pandemic
USAA is leaving its offices in downtown San Antonio by the end of the year, a result of changes prompted by the pandemic — and another blow to the area’s beleaguered office market.
The 500 employees who’ve been assigned to the offices are on hybrid schedules and now work at the insurance and financial services company’s sprawling Northwest Side headquarters, or remotely.
“Like many companies, the pandemic and a shift to hybrid and remote working have changed our real estate need as we have ample space for current and future employees in our Home Office campus,” CEO Wayne Peacock said in a statement.
USAA’S leases for 565,000 square feet between One Riverwalk Place and 300 Convent St., formerly the Bank of America Plaza, end this year. The company vacated most of the Convent Street space last year.
The moves are expanding an already-sizable hole in the downtown office market, which has struggled during the pandemic as businesses shut down and many companies switched to hybrid or remote schedules that reduced their space needs.
It’s also a turnaround from 2017, when USAA’S plan to move office employees downtown was hailed by officials as a victory for expanding the workforce in the central business district.
But it’s a continuation of a trend for USAA. The company has exited more than 10 percent of its real estate holdings in recent years, or about 1.1 million square feet of office space nationally. That represents average annual savings of about $31 million, a spokesperson said.
Last year, USAA sought to sublease about 400,000 square feet in its downtown offices.
That alone took the vacancy
rate for class A space — new, high-end space — in the central business district to 31.4 percent from 16.3 percent, Leah Gallagher, San Antonio city leader at Transwestern, said in a September interview. For Class B space, the rate at mid-year was about 7.3 percent.
“You’ve got a large amount of space available in what is a very small central business district,” she said. “I think we’ll see that space be absorbed. It’s going to take some time because it will likely require a new-to-market user to come in.”
There’s about 6.4 million square feet of office space in San Antonio’s central business district, according to Transwestern.
Across the San Antonio area, the commercial real estate firm pegged the vacancy rate at 11 percent at mid-year, though Gallagher said it could be as high as 14 percent by the end of December. The firm’s data does not include owner-occupied buildings.
Under deals negotiated in 2017 and 2018, USAA was to add 1,500 new jobs in San Antonio and relocate 2,000 office workers to downtown. It would invest $70 million in upgrades.
In return, it was to receive a loan and tax abatement from the city worth an estimated $6 million and a tax abatement worth an estimated $1 million from Bexar County.
The company ended its agreements with the city and county earlier this year and reimbursed payments and tax abatements it received in exchange for the downtown expansion.
In addition to vacating and subleasing some of its downtown space last year, USAA also began leaving and subleasing its offices at the Vista Corporate Center and Westridge buildings on the Northwest Side.
More than half of USAA’S roughly 37,000 employees nationwide are on a hybrid schedule, a percentage that has been rising, Chief of Staff Maria Cantu said in an October interview.
The company wants to have those employees in its offices three days a week but has not dictated a timeline to accomplish that, she said.
The 28-story Convent and 18story One Riverwalk buildings are owned by partnerships that include USAA Real Estate.
A spokesperson declined to disclose the San Antonio-based realty company’s plans for the buildings, saying: “These are two of the premier office assets in downtown San Antonio, and we look forward to sharing our vision for the buildings in the near future.”
In 2020, USAA sold its controlling stake to USAA Real Estate’s management and a group of investors, but kept a minority investment.
Despite its downtown exit, Peacock said the big insurance and financial services company remains committed to its hometown.
“San Antonio has been our headquarters for 100 years, and we will continue to grow here, bring in new talent and be a good corporate citizen in the San Antonio community,” he said.