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 2Q 2010 industrial stats

Source: REOC San Antonio

Propped up by healthy leasing activity reported in the first three months of the year, the local industrial real estate market exhibited signs of forward momentum heading into the second quarter but economic uncertainty slowed the demand for space over the past three months.

According to the survey of more than 30.6 million square feet of industrial space, area industrial properties experienced 45,249 of negative net absorption in the second quarter. The most significant loss occurred in the Northeast sector at Interstate Business Park where Southern Warehouse emptied 63,000 square feet.

In all, second quarter activity softened the citywide vacancy rate to 13.1% versus 12.7% last quarter while the average quoted triple net rental rate for all property types combined remained flat – unchanged over the quarter at $5.57 per square foot per year.

Despite the small setback caused by tenant moves in the second quarter, the market maintains stability overall. Supply, for example, is stable with no new projects currently under construction. Total absorption year-to-date remains positive due to healthy first quarter gains. The current citywide vacancy rate stands improved compared to 14.5% recorded last year at this time and the average citywide quoted rental rate showed a one-cent increase compared to a year ago.

Although the challenging economy has no doubt been tough for some tenants, others have contributed to a steady stream of positive activity in the market. Current market conditions favor quality tenants with ample opportunities for good deals through available concessions and deep discounts; meanwhile, market activity continues to be dominated by renewals and horizontal movement as landlords work to retain tenants and properties compete to attract tenants.

San Antonio industrial properties have maintained relative stability as tenants cautiously move through this uncertain economy but the local market faces a significant challenge ahead. Like a dark cloud looming over the local industrial market, the impending American Standard vacancy is expected to hit next quarter when the kitchen and bath products manufacturer pulls up stakes and leaves behind several large blocks of vacant space totaling more than 400,000 square feet. Many fear the negative impact that American Standard’s move will have on the market but it is important to keep perspective – the return of 400,000 square feet would move citywide vacancy to 14.4%, which is still improved compared to where the market stood a year ago.

Read Industrial real-estate sector softens in second quarter, report shows (San Antonio Business Journal, 7-23-10)

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