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 3Q 2015 Retail Market Report

Source REOC San Antonio/Xceligent

Source REOC San Antonio/Xceligent

“Steady demand for San Antonio-area retail space spurred healthy activity in the third quarter,”

Kimberly Gatley, Senior Vice President and Director of Research for REOC San Antonio. According to the survey of nearly 48 million square feet of retail lease space conducted by the research department of REOC San Antonio – a locally-based, full-service commercial real estate company – and confirmed by the Xceligent Retail Advisory Board – a group of leading retail brokers who meet quarterly to review and certify the analytic information, new leases and expansions inked in the third quarter generated 107,193 square feet of positive net absorption.

Third quarter activity pushed the year-to-date total net gain to 829,119 square feet. Since the retail development pipeline remains limited to mainly user-driven construction, absorption translated directly into a tightened vacancy rate. The citywide vacancy rate improved to 9.3% compared to 10.0% last quarter and 9.4% recorded in the same quarter last year. “Well-located, high-quality available retail space is extremely limited,” adds Gatley. While the larger, anchored Power and Community Centers enjoy sub-ten percent vacancy rates, the unanchored Neighborhood and Strip Centers continue to be challenged with double-digit vacancy rates, although the vacancy rate in the Neighborhood Center submarket improved to 13.7% compared to 14.2% recorded a year ago.

The average quoted rental rate for all types of retail space ticked up $0.04 compared to last quarter to reach a citywide average of $16.34 per square foot per year on a triple net basis. Although the current rate is down $0.31 – nearly 2% – compared to the same quarter a year ago, asking rental rates remain stable within top-tier retail centers.

Meanwhile, more than 900,000 square feet of multi-tenant retail space is currently under construction led by the redevelopment of the former Joske’s Building at RiverCenter Mall downtown which will be anchored by H&M (30,000 sf) and Dave & Buster’s (30,000 sf). In the Northeast sector, Forum Crossing – the redevelopment of what had originally been a Kmart located on Pat Booker Road in Universal City – is being transformed into a multi-tenant center featuring Mega Furniture (34,000 sf). In the Far West, work has started on Potranco West – an 86,000-square-foot shopping center located along the Highway 151 Corridor at Potranco Road to be anchored by H-E-B with adjacent small shop space and pads.

Looking ahead, demand by restaurants and retailers will continue to fill space and drive new
development. Pappadeaux Seafood Kitchen, for example, is building its second San Antonio location at The Landmark located near the intersection of IH-10 & Loop 1604. The market will also see the addition of several new big box retailers in the year ahead including Academy Sports and Outdoors (62,942 sf) at 7503 S. Zarzamora and Rooms To Go (40,000 sf) at 15339 IH-35 across from The Forum. In addition, Walmart will deliver Supercenters located at Loop 1604 & Kitty Hawk Road as well as along the IH-10 Corridor at Autumn Stage Road and Neighborhood Markets at Walzem & Gibbs Sprawl in the Northeast as well as at Pleasanton & Moursund on the Southside.

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

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