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 1Q16 Industrial Market Update

Source: REOC San Antonio

Source: REOC San Antonio/Xceligent

Activity recorded in the first three months of the year set the San Antonio industrial market on track for another strong performance in 2016.  New leases and expansions inked in the first quarter generated 354,150 square feet of positive net absorption. As a result of new supply keeping pace with demand, the citywide vacancy rate remained relatively stable at 8.1% compared to 8.3% last quarter and 8.2% in the same quarter last year. 

The first quarter delivery featured Enterprise Industrial Park II (315,362 sf).  The Northeast warehouse facility came online anchored by building materials supplier Wilsonart (40,950 sf).  The Wilsonart lease was followed closely by Berger Transport & Storage (80,000 sf) – a harbinger for more positive absorption in the second quarter.

The Distribution Warehouse category outperformed the Service Center/Flex category in the first quarter with 361,000 square feet of positive net absorption compared to negative 6,850 square feet.   As a result, citywide vacancy rates for distribution warehouse facilities tightened to 7.6% compared to 7.8% last quarter while the vacancy rate for service center/flex properties remained flat at 10%.

The average cost for renting distribution warehouse space currently stands at $4.23 per square foot on an annual, triple net basis, which is up $0.09 compared to last year at this time.  By comparison, the average cost for service center/flex space in the San Antonio area is $7.79 which is up $0.18 over the same period.

Looking ahead, new projects will grow the local inventory by nearly 3%.  While vacancy may fluctuate due to the additional inventory, it is not expected to spike thanks to the pre-leasing already in place.  A growing housing market and general construction activity continue to drive demand for industrial lease space as evidenced by recent leasing activity.

Click to download REOC San Antonio’s complete 1Q 2016 Industrial Market Report

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