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

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Retail vacancy tumbles as population growth drives service-tenant expansions

Population growth triggering expansion of need based retail sites.

Population growth triggering expansion of need based retail sites.

Population growth, increased residential construction and strengthening employment counts have triggered expansions among necessities-based retailers across the city, prompting drops in vacancy and steady hikes for rental rates. Companies such as Wal-Mart, H-E-B, CVS and Security Service Federal Credit Union are ramping up new location development alongside a multitude of restaurant, dry cleaning, healthcare, beauty and convenience stores.

According to Marcus & Millichap’s Retail Research Market Report, the city’s retail vacancy will reach an all-time low as tenant demand refuses to subside. Couple that with limited new retail construction, and the trend of rising occupancy and rental rates will remain at the forefront of San Antonio’s commercial real estate market.

For the year ahead, the city’s employment base is expected to grow by an additional 2.5 percent, creating roughly 25,000 jobs mainly in the health care, trade and hospitality industries, the report said. Every one of those jobs will contribute to the rising demand for surrounding grocery, food and service amenities, and retailers are already responding to the anticipated growth with strong pre-leasing figures for space expected to come online later this year.

By year-end 2016, retail vacancy is expected to constrict to 5.1 percent, with some areas — Atascosa, Bandera, Kendall, Medina and Wilson counties — dropping to less than 3 percent. Rental rates are also expected to continue to strengthen, with Marcus & Millichap predicting a 2.5 percent increase to $15.31 per square foot.

Wal-Mart is another retailer ramping up development in San Antonio with plans for four additional stores currently under construction and scheduled for delivery sometime this quarter.

In addition, two supercenters — which will add 115,000 square feet and 150,000 square feet to the city’s retail inventory — along with plans to finalize two 42,00-square-foot Neighborhood Market locations also are in the works.

Click here to read the full article: Retail vacancy tumbles as population growth drives service-tenant expansions San Antonio Business Journal (5-26-2016)

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