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 retail report

Source: REOC San Antonio

After announcing bankruptcy late last year, the closure of five San Antonio-area Lack’s Furniture stores disrupted the local retail market recovery effort in the first quarter.  Net absorption was negative 11,670 square feet in the first quarter, leaving 6.1 million square feet empty in the total tracked inventory of 45.2 million square feet.  The citywide vacancy rate softened from 13.1% last quarter to 13.4% at the close of the first quarter – but despite the setback from Lacks’ closures, the vacancy rate stands improved compared to 14.2% recorded in the same quarter last year. 

Recent activity included the re-tenanting of the former Barnes & Noble space by La-Z-Boy (30,000 sf) at Fiesta Trails Shopping Center and three new schools including DeVry University, Ogle School of Beauty and Academy for Massage joined the growing tenant line-up at Park North. The market continues to show signs of improvement – activity is up and leases are getting signed at a much faster pace than they have been over the past two years but the impact is not expected to register until later in the year.

The citywide average asking rental rate climbed eleven cents from last quarter to reach $18.06 per square foot per year on a triple net basis – up twenty-six cents compared to the same quarter a year ago for a modest annual increase of 1.5%.  Rental rate increases have not been evenly distributed across property types – while Power Centers and Community Centers reflect over-the-year gains, Neighborhood Centers and Strip Centers have seen rents decline. Community Centers enjoyed a strong performance with 168,344 square feet of positive net absorption recorded.  First quarter activity included the opening of two new H-E-B stores at Babcock & Huebner and in Bulverde – both replaced nearby smaller stores. 

Aside from H-E-B’s development, speculative construction remains very limited.  The largest project currently under construction is City-Base West located on the city’s South side along SE Military at South New Braunfels Ave.  The first phase of the project will span 120,000 square feet and include a 10-screen theater, restaurants and multi-tenant retail space. 

Read more at San Antonio’s retail-space sector stood its ground in first quarter (San Antonio Business Journal, 4-29-11).

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