Source REOC San Antonio/Xceligent
In all, fourth quarter gains elevated the year-end absorption total to 973,804 square feet with almost half of the total coming from the dominant Northeast market. In 2015, new construction delivered five new industrial buildings totaling more than 484,000 square feet which ended the year with a combined occupancy rate of 75%.
Citywide, vacancy tightened to 8.3% from 8.9% last quarter. Even though the addition of new inventory caused vacancy to increase by 1.1 percentage points compared to year-end 2014, market fundamentals remain strong. In the breakdown of the markets, vacancy within the Service Center/Flex market raised 0.4 percentage points from last quarter to reach 10.1% but that is down compared to 11.6% recorded during the same quarter a year ago. Distribution Warehouse, on the other hand, tightened 0.9 percentage points during the quarter to settle at 7.8% despite the increase in inventory. Overall, the San Antonio industrial market inventory grew to 35.5 million which equates to more than 2 million square feet of inventory added into the industrial market through both new construction and repositioning of existing buildings.
Compared to last year, the average cost for all types of industrial space combined recorded a decrease from $7.76 to $6.35. The decrease is observed to be primarily the result of newly implemented calculation metrics as opposed to actual decreases in quoted rents*. In reality, average asking rental rates remain stable. Previously owner-occupied existing buildings such as 5005 West Ave and 3319 N IH 35 were added to the tracked set but did little to impact rental rates. As evidence, average quoted rental rates remained unmoved from third quarter to fourth; the citywide average rent for distribution warehouse space still stands as $5.43 per square foot per year and Flex at $9.60.
*Xceligent, provider of industrial market data, revised and upgraded analysis tools in the fourth quarter
Click to download REOC San Antonio’s complete 4Q 2015 Industrial Market Report
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