EXECUTIVE SUMMARY
San Antonio’s office market momentum slowed in Q1 2026, with decreased absorption and leasing activity; however, vacancy rates continued to decrease. Positive net absorption dropped sharply by 69.1% over the quarter, recording 180,108 sq. ft., and leasing activity fell 30.3%. Although demand weakened, it remained positive, pushing the vacancy rate down 30 basis points. The construction pipeline shrank 23.5% to 88,727 sq. ft. under construction, as did deliveries, which decreased 64.1%, adding only 40,000 sq. ft. to inventory. On the rental front, San Antonio’s average full-service asking rent increased to $28.50 per sq. ft., up 1.0% quarterly from $28.22 per sq. ft. and 3.7% annually from $27.48 per sq. ft.
SUPPLY & DEMAND
KEY MARKET INDICATORS
MARKET OVERVIEW
Net Absorption Sharply Decreases Over the Quarter
Net absorption—move-ins minus move-outs—although muted, remained positive, recording 180,108 sq. ft. for the quarter. This was a sharp 69.1% decrease from the 583,611 sq. ft. of positive net absorption posted in the previous quarter. Class A properties recorded 124,689 sq. ft. of positive net absorption, while Class B properties posted 55,419 sq. ft. The CBD Class A submarket recorded the largest amount of positive net absorption, 204,468 sq. ft., while the North Center Class B submarket posted the highest amount of negative absorption, recording -98,598 sq. ft. The most significant move-in during Q1 2026 was AT&T, Inc.’s occupancy of 129,000 sq. ft. at The Reserve at Westover Hills in the Far West submarket, and Soarion Credit Union taking 47,000 sq. ft. at Trinity Plaza I in the North Central submarket.
Deliveries Significantly Down, Construction Pipeline Shrinks
Deliveries for the quarter dropped 64.1% to 40,000 sq. ft., while the construction pipeline shrank 23.5% with 88,727 sq. ft. of new construction currently underway. Both the new inventory and properties under construction are in the Northwest submarket.
Leasing Activity Down Quarterly and Annually
Leasing activity came in at 481,393 sq. ft. in Q1 2026, down 30.3% from the previous quarter and down 19.6% annually. One notable lease in Q1 2026 was Accenture’s 41,000 sq. ft. lease at 12459 Network Blvd. in the Northwest submarket. Also, Kimley-Horn moved into 20,000 sq. ft. at the Overlook at the Rim located at 18302 Talavera Ridge in the Far Northwest submarket.
Vacancy Rate Decreased 30 Basis Points
The overall vacancy rate in San Antonio’s office market decreased 30 basis points to 16.2% in Q1 2026, primarily due to positive absorption and limited deliveries. Also, vacant sublease space is minimal, at 285,914 sq. ft. (0.6% of total inventory). The CBD Class B space has the highest vacancy rate at 27.4%, while the South Class B submarket has the lowest at 5.5%.
Investment Sales Trends
CoStar Capital Market Analytics reports a cumulative 12-month sales volume of $127 million. Over the past year, 62 office properties in San Antonio were sold, with an average price of $244 per square foot and an average capitalization rate of 7.1%. One notable sale transaction in the first quarter was SageView Partners, LLC’s acquisition of WestRidge One and Two from Perform Properties. The 258,031 sq. ft., 2-building office portfolio is located at 15935 La Cantera Parkway in the Far Northwest submarket.
Rental Rates Reach Another Historic Highs
San Antonio’s full-service average rent stands at $28.50 per sq. ft., which is up 3.7% over the past year. Average asking rents for Class A and Class B space are $30.00 and $26.76 per sq. ft., respectively. Class A rates have increased by 2.3% over the past year, while Class B rates rose by 5.5%.
