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 2Q 2012 industrial market update

Source: REOC San Antonio

The San Antonio industrial market continues to benefit from activity related to the nearby Eagle Ford Shale play.  Three of the top five-largest leases signed in the second quarter were by Chalk Mountain Services, an oilfield services company specializing in the transportation of frac sand – an industrial sand used in deep well drilling of oil and natural gas.  There is approximately 650,000 square feet of leased space currently storing frac sand.  The citywide footprint of sand storage within existing buildings is not expected to expand any further but U.S. Silica, a leading provider of silica sand, recently announced an innovative alliance with BNSF Railway Co. to build a new 15,000-ton frac sand storage facility. 

The build-to-suit facility is expected to be located in the 500-acre Freeport Business Centre situated near IH-35 and Loop 410 on the city’s southwest side and should be operational by early 2013 to serve the growing oil and gas industry in the Eagle Ford Shale.

While the local industrial market has definitely benefitted from this Eagle Ford activity, it is not wholly built on shifting sand.  According to the survey of more than 31 million square feet of tracked industrial space, San Antonio-area properties reflected widespread activity that generated 250,600 square feet of positive net absorption in the second quarter which raised the year-to-date total to 912,958 square feet. 

As a result, the citywide vacancy rate tightened to 10.3% at the close of the second quarter compared to 11.9% last quarter and 14.0% recorded in the same quarter a year ago.  Improved market fundamentals supported the confidence and optimism needed to prompt a recent increase in asking rental rates.  The average citywide quoted rental rate stepped up six cents from last quarter to $5.62 per square foot per year on a triple net basis – up nine cents compared to last year at this time for a moderate annual increase of 1.6% after remaining flat for the past three years.

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