Retail rents turn in tenant’s favor in 3Q

The national recession may technically be nearing its end but the local retail market continues to reflect a slow economy.  San Antonio retail properties recorded only 45,228 square feet of positive net absorption in the third quarter which raised the year-to-date total to 314,849 square feet.  The third quarter gain improved the citywide vacancy rate slightly to 14.3% compared to 14.5% last quarter but increased compared to 13.0% recorded a year ago. 

The citywide average quoted triple net rental rate took its first significant step back in nearly a decade dropping forty-two cents from last quarter to reach $17.91 per square foot annually, down eight cents compared to the same quarter last year.  In addition, concessions have been on the rise as owners work to retain traffic-generating retailers.  Mitigating the effects of weakened demand, slowed construction will ease the pressure of additional vacancy but the market will languish until the overall economy improves and the consumer returns.  Less than 885,000 square feet of new retail space has been delivered to the area so far this year with less than 250,000 square feet expected to come online by year’s end; in all, about one-third of the amount added in 2008.