San Antonio’s industrial vacancy rate drops to 4.1% as leasing activity reaches record levels.


Q2 2022 marks the seventh consecutive quarter that demand for industrial space, represented by net absorption (1.4 million sq. ft.), outpaced supply (1.3 million sq. ft.) in the San Antonio metro—a streak not seen since Q1 2014 or almost nine years. Leasing was also strong again, with the San Antonio area recording 2.0 million sq. ft of activity, comparable to last quarter and this time last year. With 6.2 million sq. ft. delivered so far in 2022, 7.4 million sq. ft. under construction, and another 8.1 million sq. ft. proposed through 2023, the demand for industrial real estate may continue to overtake supply.

The San Antonio unemployment rate increased in May to 4.0%. The metro’s unemployment rate is above the U.S. jobless figure of 3.6% but below the state rate of 4.2%. San Antonio payrolls expanded an annualized 2.1% (5,800 jobs) over the three months ending in May. Among the major sectors, mining led growth with an increase of 11.3% (162 jobs). It was followed by manufacturing, up 10.6% (1,340 jobs), and financial activities, up 7.6% (1,745 jobs). Sectors that posted declines were construction (-6.8%, or 1,035 jobs), trade, transportation and utilities (-1.0%, or 499 jobs) and professional and business services (-0.7%, or 255 jobs). With the increase in May employment, San Antonio has gained approximately 148,700 jobs since the lowest point of the pandemic in April 2020 and surpassed pre-pandemic employment.



San Antonio’s industrial vacancy rate dropped 10 basis points quarter-over-quarter from 4.2% and decreased 180 basis points year-over-year from 5.9%. The vacancy rate for Class A properties is at 6.9%, dropping from 16.4% In Q2 2021. Total inventory for Class A space represents 24 million sq. ft., up from 17.4 million sq. ft. as of this time last year—an impressive 38% increase. The drop in the overall vacancy rate is partly due to the record-breaking leasing activity in 2022 at 4.1 million sq. ft.—in addition to 2021’s 13.5 million sq. ft. In total, 107 lease transactions, comprised of both new leases and renewals, were executed in Q2 2022. Some of the largest leases include 250,373 sq. ft. leased at Enterprise Industrial Park in Comal County; Caterpillar taking 207,492 sq. ft. at Cornerstone Business Park in the Northeast submarket; Nippon Express leasing 196,800 sq. ft. at Prologis Park in the Northeast submarket; and 121,581 sq. ft. leased at 17975 Interstate Highway 35 North in Schertz.

Westport Industrial Park, a 374,400-sq. ft. project has broken ground at 438 S. Callaghan Road in the Northwest submarket of San Antonio. Koontz Corp. is developing the park in phases, with the first of the two 187,200-sq.-ft. buildings set to be delivered in Q1 2023. NAI Partners—the commercial real estate services business of Partners Real Estate Company—are the exclusive leasing agents for Westport Industrial Park.

Real Capital Analytics data reports the quarterly sales volume for Q2 2022 in the San Antonio area at $136 million, up 20% from Q2 2021 at $113 million. The primary capital composition for buyers at the halfway point in 2022 was made up of 63% institutional investors, 21% private, and 8.5% cross-border. For sellers, the majority were 47% REIT/listed investors and 47% private. In a recent significant transaction, KKR acquired the Corner Ridge Crossing industrial park for an undisclosed price from Hines. The industrial park is made up of four properties totaling 576,046 sq. ft. and was 95% leased to a mix of national and regional tenants at the time of the sale.

DeLorean Motor Company has unveiled the Alpha5. The new vehicle is reimagining the 1981 stainless steel DMC DeLorean with the iconic gull-wing doors, except this new iteration opens up to four seats instead of two. According to a news release, the estimated specifications include a range of over 300 miles, a battery of over 100 kWh, and electronically limited top speeds of 155 mph. The Alpha5 is the focus of DeLorean’s planned revival in San Antonio, where it will build its $18.5 million headquarters at Port San Antonio. While the Alpha5 will be manufactured by third-party companies in Ontario and South Carolina, DeLorean officials said engineering and testing would be done locally in San Antonio.

H-E-B is planning to move into a massive, upcoming industrial park in the Northeast submarket with over 100,000 sq. ft. of space. According to a recent filing with the Texas Department of Licensing and Regulation, the space will be used as a warehouse for its pharmaceutical products. The project calls for a build-out of 111,845 sq. ft. at an estimated cost of$2.4 million. The warehouse location is listed at Cornerstone Industrial Park, with an anticipated completion date at the end of the year.

On average, monthly asking rental rates for the San Antonio market was $0.61 per sq. ft., as of Q2 2022, down quarter-over-quarter from $0.64 and up year-over-year from $0.57. The monthly average rate for Flex space is currently at $1.11 per sq. ft.; Manufacturing rates are at $0.53, and Warehouse/Distribution space sits at $0.52. The North Central ($1.00 PSF) and Northwest ($0.82 PSF) submarkets currently have two of the highest monthly overall average rates, followed by the CBD ($0.70). As developers experience rising costs associated with bringing high-quality new projects to the market, rental rates may remain elevated.

Leta Wauson
Director of Research
[email protected]
tel 713 275 9618