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 1Q16 Office Market Update

Source: REOC San Antonio/Xcelligent

Source: REOC San Antonio/Xceligent

New office construction in the San Antonio area delivered three new multi-tenant buildings totaling 140,733 square feet in the first quarter. Gross leasing activity within office lease space translated into 234,545 square feet of positive net absorption marking a healthy start for the new year.

With demand outpacing new supply, the citywide vacancy rate improved to 18.0% compared to 18.5% last quarter. The vacancy is up, however, compared to 17.5% recorded a year ago. The over-the-year increase is primarily due to the addition of the more than 900,000 square feet of new office lease space delivered in 2015 which, as a group, came online at below market occupancy and continues to move through the lease-up process.

Office properties closed the quarter with a combined citywide average quoted rental rate of $22.08 per square foot on an annual, full-service basis. The citywide average rent is up a roughly $2.00 per square foot compared to a year ago reflecting higher rental rates quoted for new product. On average, the cost for renting Class A office space saw an annual increase of $0.87 psf to reach $26.80 while the average rent for Class B space rose only $0.03 for the same period and stands at $20.19.

Developers and lenders are keeping a keen eye on the window of opportunity for development as more than 475,000 square feet of office lease space moves through the pipeline.

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

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