Two brothers living in California have found a profitable niche investing in San Antonio’s neighborhood shopping centers.
Rami and Jeff Kotel, co-founders of San Antonio-based Kotel Investments, own and manage nearly 100 properties in the Alamo City and the surrounding areas. Over the last two years, they’ve primarily focused on retail acquisitions because of increasing demand in that sector.
“We seek out these neighborhood shopping centers because we have so much product in San Antonio that we’re able to move tenants around based on their needs,” Rami Kotel said.
Just this month, the brothers purchased three neighborhood retail strips and two Starbucks for an undisclosed amount.
The three shopping centers are all on the Northwest Side — one at 6563 Babcock Road with eight tenant spaces, two of which are up for lease; the second is just 1.5 miles away, at 6330 De Zavala Road, which has six tenants and one available space; the third center, which also has six tenants and one vacant space, is at 10203 Culebra Road.
The Starbucks locations are at 214 W. Bitters Road on the North Side and 8350 FM 78 in Converse.
“Most of our properties are on the North, Northeast and Northwest sides of town,” Kotel said. “There are a lot of newcomers coming in from other states, looking to open up their businesses, and we see them leaning toward the North Side of town, where there are new homes being built, good schools and stronger leasing opportunities.”
The Kotel brothers purchased their first property in San Antonio in 2004 and have invested in only commercial real estate in the Alamo City. They briefly relocated here in 2006 to develop some properties over the course of a couple of years before returning to California to be with their family.
“Since then, we’ve steadily grown our portfolio because we value both the strength of the market and the great relationships we’ve built with the people over the years,” Kotel said.
Kotel Investments’ tenants are largely mom-and-pop businesses, like hair or nail salons, along with churches and event centers. If a space is vacant upon purchase, they rehab it for the next tenant. Most of their maintenance contractors, like electricians, plumbers and HVAC companies, are also their tenants — in their industrial properties.
“A lot of our tenants have been with us for more than 10 years,” Kotel said. “On a monthly basis, we find out what they need for growth. For example, we have one church that wants to downsize and another that needs to expand, so we’re swapping their spaces. We’re very connected to our tenants. They have our cellphones, and we’re very hands-on landlords.”
Retail spaces get snapped up quickly in San Antonio, which is why the Kotel brothers continue to heavily invest in the industry.
At the end of 2024, San Antonio’s retail spaces were 95.2% occupied, the highest level since Weitzman began monitoring the market in the mid-1990s, according to a biannual report from the Dallas-based commercial real estate firm. The Alamo City retail market has experienced healthy occupancy of 90% or higher for 14 years in a row, the report reads.
Kotel said that around 98% of their retail spaces are leased, and it typically takes only 30 to 60 days to find a tenant for a vacant space after they buy a new property. Brokers often reach out to the brothers first before officially putting a retail center on the market because they know the Kotels are always actively looking for more acquisition opportunities.
“There’s not much on the market because San Antonio is a great market to do business in,” Kotel said. “Neighborhood shopping centers don’t stay vacant for long, which in turn creates more demand. Over the last 10 years, retail has pushed forward ahead of industrial.”