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 Releases 4Q 2014 Retail Market Report

Source REOC San Antonio/Xceligent

Source REOC San Antonio/Xceligent

The San Antonio retail market experienced a positive but rather quiet fourth quarter. “Aside from the major push by Walmart, market activity seems to be rather flat but there is a general consensus among industry insiders that the retail industry is not dead – it’s evolving,” says Kim Gatley, Senior Vice President and Director of Research for REOC San Antonio, a locally-based, full-service commercial real estate company. “Forecasts call for more change in the next five years than the industry has seen in the previous 100 years. The mantra seems to be – ‘evolve or get left behind’.”

Retailers may be busy trying to figure out how to evolve in our new digital marketplace, but at the same time, they continue to operate in the real world of bricks and mortar. In this realm, a sound economy and a growing consumer base are essential elements to success. San Antonio’s stable economy and growing population provide such an environment. Over the past twelve months, the San Antonio metro area added nearly 28,500 jobs for an annual growth rate of 3.1%, according to the Texas Workforce Commission.

According to the survey of more than 47 million square feet of retail space, San Antonio area retail properties experienced 52,317 square feet of positive net absorption in the final quarter of the year which raised the year-end total to 566,917 square feet. “Demand for retail space has steadily absorbed excess space across the city. Much of the vacancy that remains suffers from functional obsolescence of some sort,” says Brian D. Harris, CCIM, Senior Vice President/Partner for REOC San Antonio.

The local retail market closed out the year with a citywide vacancy rate of 9.4% – which remained stable compared to the previous quarter and improved compared to the 10.3% recorded in the same quarter a year ago. The citywide average quoted triple net rental rate stepped back $0.05 from last quarter to settle at $16.60 per square foot per year which is exactly where it stood last year at this time.

“Rates vary by location and product type but often follow a similar trend line. This quarter, however, the results were a mixed bag,” says Gatley. By product type, the citywide vacancy rate for Neighborhood Centers improved and the average cost of renting space increased compared to a year ago while Strip Centers, on the other hand, saw vacancy increase and average rents drop. Bucking typical patterns, the citywide vacancy rate for Power Centers and Community Centers improved compared to the same quarter last year but quoted rents dropped, perhaps reflecting some of the uncertainty landlords feel towards the growing trend of reducing the size of stores to trim overhead expenses.

Click to download REOC San Antonio’s complete 4Q 2014 Retail Market Report

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