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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San Antonio Industrial Market Stuck in Low Gear – 2Q 2009

2Q09_SAIndSnap_BlogTough economic times seem to be keeping San Antonio’s industrial sector in low gear.  At the close of the second quarter, the citywide average quoted triple net rental rate retreated to $5.56 per square foot per year – down one cent from last quarter and six cents or 1.1% compared to a year ago.  The citywide vacancy rate increased to 15.2% compared to 13.6% last quarter and 13.3% recorded last year at this time. 

The delivery of East Kelly 3 (275,000 sf) at Port San Antonio factored into the higher vacancy rate but the empty building was not all to blame.  Tenants vacating space outweighed new leases signed in the second quarter resulting in 51,043 square feet of negative net absorption.

On the positive side, more than 450,000 square feet of new leases and expansions were signed in the second quarter which is up from the 357,000 square feet recorded in the first quarter – an early indication that leasing velocity may be on the upswing.  Some of the largest leases reported in the second quarter backfilled sublease space.  South Texas Blood & Tissue, for example, subleased 98,400 square feet at Eisenhauer 35 Building B and Flooring Services South West subleased 38,951 square feet at Green Mountain Business Park 4.  Roughly 430,000 square feet of industrial sublease space is currently available in the marketplace which wehn combined with direct vacancy pushes the overall citywide vacancy rate up to 16.6%. 

Investment activity in the second quarter included ProLogis’ sale of Industry Park Distribution Center 6 (83,692 sf) to Shweiki Media.

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