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

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REOC Releases 4Q 2014 Office Market Report

Source REOC San Antonio/Xceligent

Source REOC San Antonio/Xceligent

“Despite a relatively quiet fourth quarter, the San Antonio office market closed the year with some impressive numbers,” says Kim Gatley, Senior Vice President and Director of Research at REOC San Antonio, a locally-based full-service commercial real estate company. Demand for office space yielded a third consecutive year of positive net absorption. According to the survey of nearly 29 million square feet of office lease space, new leases and expansions inked in the fourth quarter generated 42,716 square feet of positive net absorption which raised the year-end total to 685,675 square feet – the highest level recorded since 2006.

New construction delivered nearly 250,000 square feet of new office lease space in 2014 with more than 900,000 square feet of speculative space moving through the development pipeline. The eight major projects currently under construction and scattered throughout the Northwest, Far North and Far West sectors will increase the city’s office lease space inventory by 3%. More than 260,000 square feet has been reportedly pre-leased which accounts for roughly 30% of the total amount under construction.

“In addition to spec projects, the overall inventory of office space continues to grow by way of owneroccupied facilities,” says Adam Berlin, Senior Vice President, REOC San Antonio. Frost Bank, for example, is nearing completion on its new 374,000-square-foot facility on 25 acres in Westover Hills and Security Service Federal Credit Union recently announced plans to consolidate several offices into a new corporate campus facility located on 66 acres along IH-10 at UTSA Blvd. which is expected to break ground in the spring.

Rental rates continue their slow but steady march upward. The average quoted full-service rental rate for area office space now stands at $20.37 per square foot per year on a full-service basis which is up $0.65 or 3.3% compared to the year-end 2014. The citywide average cost for renting Class A space currently stands at $25.70 – up $0.35 or 1.4% compared to a year ago.

San Antonio continues to see job growth which is a major driver for commercial real estate. Over the past twelve months, the San Antonio metro area added nearly 28,500 jobs for an annual growth rate of 3.1%, according to the Texas Workforce Commission. Despite the uncertainty caused by falling oil prices, the Federal Reserve Bank of Dallas projects that San Antonio job growth will likely hit 3% again in 2015 which is better than the 2-2.5% growth rate forecasted for the state. “More jobs generally translates into demand for more office space which means 2015 should turn out to be another strong year for the office market,” concludes Berlin.

Click to download REOC San Antonio’s complete 4Q 2014 Office Market Report


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