REOC San Antonio
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Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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REOC Releases 3Q 2015 Industrial Market Report

Source REOC San Antonio/Xceligent

Source REOC San Antonio/Xceligent

Tenant demand for San Antonio-area industrial space led to a positive third quarter performance.  New leases and expansions between the beginning of July and the end of September generated 169,233 square feet of positive net absorption which raised the year-to-date total net gain to 760,243 square feet, according to the survey of nearly 35 million square feet of industrial lease space conducted by the research department of REOC San Antonio and confirmed by the Xceligent Industrial Advisory Board – a group of top industrial brokers who meet quarterly to review and certify the analytic information.

“Although no new product was added in the third quarter, the tracked set of industrial space increased with the addition of the existing distribution warehouse facilities,” explains Kimberly Gatley, Senior Vice President and Director of Research at REOC San Antonio, a locally-based, full-service commercial real estate company.   The facility at 1410 Callaghan (193,908 sf), for example, was formerly owned and occupied by Medline Industries which was later vacated and, subsequently, sold to Exeter in late 2012; the property was recently leased by Amazon which topped the list of largest leases inked in the third quarter.

The San Antonio industrial market currently stands with a citywide vacancy rate of 8.9% which is up slightly compared to 8.4% last quarter and 6.1% recorded in the same quarter last year but, over that time, more than 484,000 square feet of new industrial product has been added to the market.

New product has been well-received with roughly 75% already filled.  With that in mind, “developers are pushing more than a million square feet of industrial lease space through the development pipeline,” says John Greg Turcotte, CCIM, Senior Vice President/Partner at REOC San Antonio as well as a member of the Xceligent Industrial Advisory Board.  Build-to-suit projects, such as the 305,000-square-foot facility for Conn’s which broke ground this quarter at the Cornerstone Industrial Park, contribute to a pre-leasing rate of nearly 30% for those projects currently under construction.

Other projects currently under construction include three speculative warehouse buildings in the Northeast sector: Cornerstone Industrial Park 3 (144,137 sf), Doerr Lane Industrial Park (213,864 sf) and Enterprise Industrial Park II (315,362 sf).  In addition, Dollar General is nearing completion of its 900,000-square-foot facility located just south of Interstate Highway 10 at North Foster Road.

The Distribution/Warehouse segment of the market, which has gained all of the new construction delivered so far this year, saw the citywide vacancy rate jump from a very tight 4.7% last year at this time to 8.7% at the close of the third quarter.  Meanwhile, the Service Center/Flex submarket closed the third quarter with a vacancy rate of 9.7% which is improved compared to 10.9% recorded in the same quarter a year ago.

The average cost for all types of industrial space combined remained stable over the quarter at $7.74 per square foot on a triple net basis but that is down two cents compared to last year at this time.  While the average quoted rent for Service Center/Flex space climbed $0.25 compared to the same quarter last year to reach $9.60 per square foot, Distribution Warehouse properties saw the quoted average step back $0.31 over the same time period to close the quarter at $5.43.

Click to download REOC San Antonio’s complete 3Q 2015 Industrial Market Report

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