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 2012 industrial market update

Source: REOC San Antonio

New leases and expansions signed between the first of January and the end of March generated 662,358 square feet of positive net absorption within area industrial properties – the largest quarterly gain since the fourth quarter of 2004 and a reversal of last year’s first quarter performance of nearly 217,000 square feet of negative absorption. 

Several large warehouse leases were reported in the first quarter including Bergstrom Climate Control (144,948 sf) at Port San Antonio – East Kelly Railport but the single-biggest contributor to overall net gain was the lease by H-E-B for 282,134 square feet at Rittiman East.  John Greg Turcotte, CCIM, Senior Vice President & Partner, REOC San Antonio represented H-E-B in the transaction.  The larger uses stepped up for the “bulk” of the absorption with H-E-B and Bergstrom accounting for 65% of the absorption.  The larger users were some of the first to leave the market in 2008 and these two deals are great examples of companies taking advantage of depressed rents before the market turns. 

First quarter activity tightened the citywide vacancy rate to 11.9% compared to 13.2% last quarter and 15.2% recorded in the same quarter last year.  Healthy demand and leasing velocity have vacancy rates headed in the right direction but increases in rental rates have been slow.  The average quoted triple net rental rate for industrial space citywide remained unchanged from last quarter at $5.56 per square foot – up just one cent from a year ago. 

As the real estate cycle progresses, the market will continue to tighten which will put upward pressure on rental rates.  Even as the market tightens, financing is still the choke hold on speculative development.  Meanwhile, the Eagle Ford Shale play remains the leading story as large and small tracts of land are being developed for stand alone users.

Click to read Warehouse deals helping to bulk up San Antonio industrial sector (San Antonio Business Journal, 4-27-12)

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