REOC San Antonio
Commercial Real Estate Since 1974   
Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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REOC San Antonio releases 4Q industrial stats

Source: REOC San Antonio

The economy persists in playing a major role in the overall slowdown of the San Antonio commercial real estate environment but the industrial market ended the year on a positive note, according to the fourth quarter survey of more than 30 million square feet of competitive, multi-tenant industrial space conducted by the research department of local commercial real estate company REOC San Antonio.

Leasing activity in the fourth quarter resulted in 36,333 square feet of positive net absorption led by gains in the Distribution Warehouse sector which has benefited to some degree by demand from suppliers who are servicing local military construction projects. Fourth quarter gains raised the annual absorption total to 154,762 square feet which, in turn, improved the citywide direct vacancy rate to 13.6% – down slightly from 13.8% posted a year ago.

New construction ceased after delivering 315,000 square feet of new industrial space early in the year but the ground work for the Shelby Building located on the city’s South side near the Toyota plant has been completed and the slab is ready to be poured the moment a tenant is secured.

In the meantime, tenants are slowly leasing up some of the 2.9 million square feet delivered in 2007-2008. Graybar Electric, for example, expanded into 46,200 square feet at City Park East Distribution Center Building E, GVH/Millennium Distribution took down 52,800 square feet at Eisenhauer 35 Distribution Center Building 7 and Frank Supply Co. is moving into 27,964 square feet at Tri-County Distribution Center V.

Compared to historical norms, demand has declined, especially for Service Center/Flex space, which has resulted in decreased asking rental rates and prompted many landlords to offer more concessions. The average quoted triple net rental rate for all property types citywide retracted to $5.55 per square foot per year – down two cents from last quarter and five cents compared to a year ago – an annual decline of nearly one percent. The leverage pendulum will likely remain in the tenant’s favor through most of 2010.

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