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 office market update

Source: REOC San Antonio

The downtown San Antonio office market experienced a big win in the third quarter with the backfilling of more than half of the expired AT&T sublease space that returned to direct vacancy last quarter.

Leading all activity citywide, HVHC, Inc. (EyeMasters) leased 112,652 square feet at IBC Centre I & II. Joining HVHC, Argo Group US Inc. will occupy approximately 77,000 square feet. In all, the Central Business District netted 265,034 square feet in the third quarter. However, in an unusual reversal of fortunes, the CBD’s gain came at the expense of the suburban market which suffered 99,504 square feet of net loss in the third quarter. Neither of the headline tenants are new to the market; in fact, both represent relocations from north side office space. Still, the net result of third quarter activity generated 165,530 square feet of positive net absorption which helped offset losses posted in the first half of the year, although year-to-date total remains in the red.

The citywide vacancy rate currently stands at 19.9% compared to 18.7% recorded last year at this time. Despite the increased vacancy, quoted rental rates increased 2.8% over the same quarter last year to reach a citywide average of $21.11 per square foot annually on a full-service basis.

Speculative construction remains very constrained and may be limited to only one multi-tenant project this year. The office building known as 17115 San Pedro Avenue (42,377 sf) came online this quarter anchored by Killam Development (7,100 sf). Looking ahead, The Bakery on Broadway redevelopment project is expected to deliver 107,644 square feet early 2012 and a new ground-up project at Pearl Brewery will add new office space over street-level retail later in 2012.

Click to read the related article: AT&T’s shadow still looming over local office market (San Antonio Business Journal, 10-28-11)

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