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 1Q 2011 industrial report

Source: REOC San Antonio

The San Antonio industrial market took some hits in the first three months of the year making it clear that the road to recovery is going to be a little bumpy.  The first quarter survey of nearly 30.7 million square feet of multi-tenant industrial space revealed that the citywide vacancy rate climbed to 13.8% – up compared to 13.3% last quarter and 13.0% recorded in the first quarter of 2010. 

Gross leasing activity included a government contractor (72,470 sf) at Port San Antonio East Kelly 3 and Coleman American Moving & Storage (43,470 sf).  Tenant moves and downsizings outpaced new leases and expansions which resulted in 161,559 square feet of negative absorption. Greenstar Recycling, for example, emptied nearly 148,000 square feet of warehouse space on the city’s south side at Interchange East Distribution Center.  Although San Antonio dodged the catastrophic effects of the Great Recession, the impact of a significantly slowed economy has filtered down to our region in the form of large blocks of vacant space and it is likely to get a little worse before it gets better.

The citywide average quoted triple net rental rate for all types of industrial space remained relatively stable.  Speculative development remains at a standstill and is not expected to return until excess space is absorbed but there are currently several build-to-suit projects underway.  First quarter investment activity included the sale of Lanark Distribution Center and Interchange North Business Center.  The good news is that San Antonio was able to circumvent the effects of the recession long enough to enable the national and global economies to rebound in the positive direction.  As we have experienced in the past, the local down cycle will not be as deep or last as long as other markets – the velocity of smaller to mid-sized transactions is already on the upswing.

Read more at San Antonio’s industrial market facing uphill road to recovery, report shows  (San Antonio Business Journal, 4-22-11) and Vacancy rates see uptick (San Antonio Express-News, 4-27-11).

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