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 3Q 2010 retail stats

Source: REOC San Antonio

Retail market activity has slowly increased throughout the year.  In earlier months, leases were slow to materialize from inception to completion but the pace of recent activity has picked up.  

Grocery-anchored and power centers have performed well – attracting more attention than non-anchored projects.  The market has seen a few new and expanding retailers such as dd’s Discount, Plato’s Closet and Forever 21, which recently backfilled the vacant anchor space left behind last year by Mervyn’s at North Star Mall.  Many active tenants have taken a flight to quality rather than adding new stores.  New restaurant concepts such as BJ’s Brewhouse, Freebirds World Burrito, Smash Burger, Five Guys Burgers and others have opened new locations.

In all, gross leasing activity generated 103,212 square feet of positive net absorption in the third quarter which raised the year-to-date total net gain to 130,300 square feet – a comparatively small amount for this market but positive nonetheless.  Citywide vacancy decreased to 13.4% – down 0.5% compared to the same quarter last year.  At the same time, the average quoted triple net rental rate increased by $.01 per square foot to $17.92 but disciplined tenants with good financials continue to drive deals and have been able to demand significant concessions on renewals and new leases.  

Aside from the three new area stores opened by locally-based H-E-B Grocery, new development remains at a standstill.  Investment activity also remains slow with capital still very tight.  The market is not expected to see a huge turnaround in 2011; instead, the market is expected to continue a slow and steady improvement similar to what we have seen this year.  Some of the large anchors are starting to get active again but it will be 12-24 months before that activity turns into new store openings.

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