REOC San Antonio
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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 retail report

Source: REOC San Antonio

The 2010 holiday season, which delivered a much-needed shot in the arm for retailers, contributed to the 6.6% increase in national retail sales for the year, according to a recent report released by the Commerce Department.  The report indicated that the pace of retail sales picked up in the second half of the year.  Similarly, the San Antonio retail real estate market saw the pace of leasing activity slowly pick up in the last six months of 2010.   

According to the survey of nearly 45 million square feet of area retail properties, new leases and expansions inked in the fourth quarter generated 293,579 square feet of positive net absorption which pushed the year-end total to 423,879 square feet.  The worst seems to be behind us now and the market is starting to show modest but encouraging signs of recovery.

The citywide vacancy rate improved to 13.1% – down from 13.4% last quarter and 13.7% recorded in the same quarter last year.  In 2010, less than 321,000 square feet of new retail center space was delivered to the local market including the Westlakes H-E-B Plus center (127,000 sf) located at Loop 410 & Marbach Road, Mission Plaza (111,917 sf) located at SE Military & Roosevelt and the Alamo Drafthouse Theater (27,000sf) at Village at Stone Oak located at US 281 & Stone Oak Parkway. 

Rental rates, however, have not yet shown signs of any real recovery.  The citywide average quoted triple net rental rate increased only three cents compared to last quarter to reach $17.95 per square foot per year – up only ten cents compared to a year ago for a slight annual increase of less than one percent. 

In general, retail leasing and investment activity remained very limited compared to the go-go days of 2007 – even the positive absorption recorded was only a quarter of the average amount recorded over the past five years – but it was positive nonetheless.  Activity appears to be on the upswing but recovery is expected to be slow and will be hampered by the closure of five area Lack’s Furniture store locations ranging from 44,000 to 48,000 square feet each three leased properties at 8611 Perrin Beitel Road, 18603 Blanco Road, 11791 Bandera Road and two company-owned properties at 2600 SW Military Drive and 6838 Bandera Road.  Still, retail real estate professionals and retailers alike are cautiously optimistic that there are brighter days ahead.  Reflecting a relatively stable local economy and the growing confidence of consumers and retailers, the retail landscape has started to see improvement.  Moderate growth is expected to continue through 2011.

For more information, read San Antonio retail real-estate market once again stirring, report shows (San Antonio Business Journal, 2-4-11) and  Best holiday shopping gain in 6 years (CNN Money.com, 1-14-11)

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