Source: REOC San Antonio
The momentum that has slowly carried the San Antonio office leasing market along a path towards recovery over the past twelve months continued in the fourth quarter. Most agree that at this time last year the market was dead with a lot of uncertainty on all fronts but activity has picked up and there seems to be a new energy in the market.
New leases and expansions generated 107,190 square feet of positive net absorption which raised the year-end total to 556,200 square feet. The healthy demand for space indicates that the San Antonio office leasing market is in a recovery cycle.
The citywide vacancy rate did not reflect the substantial amount of positive absorption recorded in 2010 due to the additional vacancy delivered via new projects such as the two éilan buildings (205,951 sf) and 100 Sentry Gateway (95,000 sf). Citywide, office properties closed the year with a direct vacancy rate of 18.5% which is only slightly improved compared to 18.6% recorded both last quarter and last year at this time. The citywide average quoted full-service rental rate remained flat over last quarter at $20.54 per square foot and showed only a ten-cent increase compared to the same quarter last year. Landlords are cautiously optimistic that the market will see improvement in 2011 resulting in an over-the-year increase better than the half-percent gain seen in 2010.
The pipeline of speculative construction remains very limited with only one North Central building expected to come online in 2011 – the 45,000 square-foot Killam Office Building to be anchored by Killam Oil (7,000 sf). The fact that the market is not expecting the delivery of any sizeable speculative projects in the next twelve months will contribute to the recovery efforts by keeping tenants focused on leasing up existing space.
Read more in San Antonio’s office market is slowly regaining its stride (San Antonio Business Journal, 1-21-11)
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