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 2010 Industrial report

Source: REOC San Antonio

The San Antonio industrial market enjoyed an unexpected bounce in the final quarter of the year. New leases and expansions generated 172,529 square feet of positive net absorption which raised the year-end total to 182,386 square feet.  As a result, the citywide industrial market vacancy rate improved to 13.3% compared to 13.9% recorded last year at this time.

The market continues to post positive net absorption and the vacancy rate tightened compared to this time last year but the market has not yet recovered in terms of rental rates.  Despite the fact that quoted rents remain flat, the majority of recent leases have been negotiated with rents substantially lower than the quoted rate.  Aggressive landlords are eager to maintain stable occupancy over rate in the short term, especially in light of anticipated tenant moves that will challenge the market in 2011 including the recently announced bankruptcy of Lack’s Furniture that will shutter a 380,000 square foot distribution facility in the satellite community of Schertz.

The Eagle Ford Shale, a new oil and natural gas producing field located just south of San Antonio, is starting to impact the city’s economy and commercial real estate market.  Ideally positioned to benefit from the drilling activity, the area has already attracted some major players in the industry including EOG Resources, BP and Chesapeake Energy which have established offices here.  Mission Well Services, LLC, an Eagle Ford servicer, recently purchased 11226 IH-10 East (31,500 sf) which is a sign of things to come.  Oilfield services will continue to dominate the industrial market news, especially on the Southside, as an inventory of facilities is constructed to serve the Eagle Ford play for the next decade. It is reasonable to expect that we will see expanded activity in the overall industrial market as business picks up for general contractors, surveyors, environmental firms and heavy equipment operators.

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