San Antonio Industrial Asking Rents Increase 13% Year-Over-Year

San Antonio Industrial 
The overall vacancy rate in the San Antonio industrial market as of April 2023 is 5.6%, up 150 basis points from 4.1%, year-over-year. The San Antonio industrial market recorded 2.2 million sq. ft. of leasing activity, comprised of new leases and renewals. Net absorption—move-ins minus move-outs—is at 982,162 sq. ft., down 51% year-over-year from a more abundant 2 million-sq.-ft.-start in 2022.The average monthly rental rate has kept up with inflation, with a 13% increase from last year, currently standing at $0.68 per sq. ft. Relatively, the CPI climbed by 4.9% for the 12 months ended in April, according to the Bureau of Labor Statistics, this was the smallest 12-month increase since April 2021. This trend could potentially alleviate some of the pressures on San Antonio’s industrial market in the future.

San Antonio Office
Four months into 2023, overall vacancy was at 15.1%, marking a 300-basis point increase from 12.1% in April 2022. Despite this, the San Antonio office market recorded 1.1 million sq. ft. in leasing activity, up 25% from this time last year. Net absorption experienced a 112% increase year-over-year from -748,984 sq. ft. to 91,215 sq. ft. Office construction is at 1.1 million sq. ft, decreasing 28% from 1.5 million sq. ft. the prior year. Meanwhile, deliveries totaled 1 million sq. ft, —the highest recorded since April 2007—significantly up from 234,489 sq. ft. last year. Fasken Development’s North Rim Corporate Campus, a two-building site spanning 717,000 sq. ft., is a significant contributor to April’s deliveries. The North Rim Corporate Campus is located on 16 acres along the North IH-10 corridor.

San Antonio Retail
As of April 2023, overall vacancy in the San Antonio Retail Market tightened to 3.9%—a decline of 40 basis points from the previous year’s 4.3%. Retail leasing activity tallied 748,770 sq. ft., down 36% from 1.1 million sq. ft. this time last year. Net absorption is at 221,928 sq. ft., down 66% from 666,000 sq. ft. year-over-year. Although still strong, the retail construction pipeline decreased 38% from 1.7 million sq. ft in April 2022 to 1 million sq. ft. in April 2023. Deliveries also decreased (66%) year-over-year from 619,765 sq. ft. to 211,807 sq. ft. In recent news, the U.S. Bankruptcy Court for the North District of Texas approved the sale of Tuesday Morning—a well-known household merchandise company—to a liquidation company, closing 6 stores in San Antonio (24 stores in Texas). This follows the news that 52 Bed Bath & Beyond stores in Texas will close, creating a Texas-sized hole in the retail industry.

Alex Babcock
Senior Research Analyst
[email protected]
tel 713 275 9618