How the San Antonio-Austin area economy builds a mega-metro

But for economic development leaders, the only thing new about the San Antonio-Austin mega-metro is the name. For those working to attract high-dollar business deals in the corridor between the two cities, the allure of the proximity to two major talent centers has been a selling point for at least a decade.

In this installment, which will focus on business, we spoke with economic development directors in the smaller mega-metro cities to understand when everything changed, how the influx of technology has transformed their towns, and what the future might look like as the region grows.

“I think in reality, we’ve been a mega region and operating as a mega region for a period of time now for at least a decade,” says Will Conley, former CEO of the Greater San Marcos Partnership. 

Conley serves in an interim capacity as the non-profit economic development company serving the city and Hays and Caldwell Counties searches for its next top executive.

San Marcos and the surrounding area has been able to recruit high-dollar business to the region since Conley has been involved. The city is attractive to businesses because of some combination of population explosion — San Marcos grew more than 50% between 2010 and 2020 — and its proximity to talent centers in San Antonio and Austin.

Whereas 20 years ago, a prospective business might need an explanation on the city and the region, Conley says that the job of economic development professionals has gotten much easier. Thanks to companies like Samsung, Apple, Toyota, and Tesla, all of whom have invested hundreds of millions or billions of dollars into the mega-region, former outliers like San Marcos have become hotspots.

Conley says he recently sat in on an economic development conference in Williamson County, at which the principals involved discussed billion dollar deals for three hours.

“If you were in the $500 million range,” he says, “you were no longer part of the three hours.”

Even though San Marcos sits almost dead center in the middle of the mega-region, New Braunfels, considered a suburb of San Antonio, has also approached economic development on a regional basis for years.

Jeff Jewell, director of economic development for New Braunfels, says that from a governance perspective (spoiler alert, more on that in a future story), the mega-region lags behind the economics.

“The developers, definitely, I think, do look at it as one market,” he says. “I think everybody’s pretty bullish on the region generally.”

Similarly to San Marcos, Jewell points to Giga Texas, Tesla’s flagship manufacturing factory in Austin and Samsung’s $17 billion chip plant in Taylor as bellwethers for massive expansion in New Braunfels. The money, it appears, has trickled south down I-35.

In Kyle, Tesla recently signed a lease for one million square feet at the Kyle 35 Logistics Park. At an event announcing the deal, Mayor Travis Mitchell slyly mentioned that they were confident that at least some of the 1.4 million square feet of warehouse space meant to attract big business would net at least a supplier to Tesla.

“What we got instead was Tesla,” Mitchell said.

Though all cities along the corridor looking to be major players offer incentives to developers and businesses looking to invest in the region, with the influx of companies like Tesla, many are now able to be much more selective. The relationship, once one-sided, has shifted some of the leverage toward smaller cities in the mega-metro. They no longer have to bat their eyes and wait in the corner of the dancehall, hoping for big tech to ask for a dance.

“[The Tesla deal] gives Kyle credibility,” said Victoria Vargas, director of economic development for the City of Kyle. “Other companies can see that if there’s a large investment by Tesla here, then we’ve got to be doing something right.”

As these communities grow, they face major concern from residents about what will happen to both the physical architecture of the cities and how they will feel. There’s a line between the past and the future, and many of these cities are standing with one foot on either side.

“I don’t think it’s healthy for the city to just never change and evolve over time,” Jewell says. 

But there’s a balance that each of these communities has to strike. After all, though developers view the region as a monolith, the people within those communities find personal identities in their cities and towns. After all, New Braunfels is different than Seguin and Lockhart is different from Kyle in the same way that Dallas and Fort Worth are joined, and yet not so inextricably linked.

Because of its history as a tourist town, “New Braunfels has kind of its own thing going on along the corridor, and its own identity,” Jewell says. It can’t — and won’t — change in the same way that a place like Buda might.

In that way, it won’t look like one big urban zone through the mega-metro, each city and town erecting downtowns and smashing them together.

“You’re never going to see high rises in Wimberley,” Conley says. “I don’t care what year it is.”

But you might see them just 25 miles east on FM 150.

Vargas hears every day from residents concerned about Kyle’s future. To balance the immense growth, the city has invested millions in new parks and sought out retail opportunities to provide residents with a sense of pride in the city.

But she admits that being one of the fastest-growing cities in America makes retaining small-town charm a difficult task. Instead, Kyle is using this time to plow ahead into the future, using the formal formation of the mega-metro as a way to shed its former identity as purely an Austin suburb.

Vargas says that Kyle’s proximity to Austin has been a huge benefit, but since about 2016, when the city adopted a new economic development strategic plan, it realized that it wanted its own identity. They found, through research, that 80% of the city’s population left every weekday, primarily to work in Austin. Additionally, they found that shoppers regularly bounced to nearby cities like New Braunfels to get their fix. That’s leaving money on the table.

“We’re trying to shed the image of the bedroom community,” Vargas says. “We no longer have to say, ‘Oh, we’re just south of Austin.’ I don’t remember the last time I said that to anyone.”