EXECUTIVE SUMMARY

San Antonio’s office market in Q2 2026 experienced negative net absorption, higher vacancy, and decreased leasing activity. Net absorption decreased to -85,357 sq. ft. from 188,922 sq. ft. recorded in the previous quarter, with Class A properties contributing -10,538 sq. ft. and Class B -76,744 sq. ft. Vacancy edged up to 16.9%, a 22-basis-point increase from Q1 2026. Leasing activity decreased 18.3% to 370,742 sq. ft. Construction deliveries totaled 0 sq. ft., and the under-construction pipeline stands at 60,000 sq. ft. Rental rates increased 3.5% quarterly to $29.54 per sq. ft.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

ECONOMIC UPDATE

San Antonio added 4,800 jobs over the year ending May 2026 (+0.4%), for total nonfarm employment of 1.20 million. Transportation and warehousing was the standout (+3,800, +8.0%), alongside retail trade (+4,200, +3.4%) and professional and business services (+3,000, +1.9%); leisure and hospitality (−1,700) and information (−1,300) declined. Industrial-linked employment rose 2,600 jobs (+1.8%), the strongest industrial employment growth of the five metros. Unemployment was 3.8% in April, up 30 basis points year over year.

The metro’s $150.3 billion real GDP (2023) grew 4.6% year over year. Population reached 2.76 million with median household income of $78,112 (+6.7%). Home prices rose 1.4% (Q1 2026), the firmest of the Texas majors, while permits fell 11.9% year-to-date to 4,653 units.

NET ABSORPTION TURNS NEGATIVE IN Q2 2026

Net absorption—move-ins minus move-outs—was negative 85,357 sq. ft. in Q2 2026, down from 188,922 sq. ft. in Q1. Class A properties contributed -10,538 sq. ft. and Class B properties -76,744 sq. ft. At the submarket level, Northeast was the only submarket to post positive total absorption, while North Central recorded the largest decline. One notable Q2 move-in was Accenture, which took 40,996 sq. ft. at The Oaks at University Park, Building III. Meanwhile, Humana vacated its 55,676 sq. ft. call center at 8119 Datapoint Drive, which it sold to Kidman Enterprises LLC at the end of 2025.

QUARTERLY LEASING VELOCITY DECREASES 18.3%

Quarterly leasing velocity—comprised of new leases and renewals—decreased 18.3% to 370,742 sq. ft. from 454,026 sq. ft. in Q1 2026, and is down 8.2% year-over-year. Notable leases signed in Q2 2026 include UnifyCX’s 27,578-sq.-ft. lease at Austin Highway Business Center in Northeast, and Mindcolor Autism’s 12,000-sq.-ft. lease at 502 E Ramsey Rd in North Central.

VACANCY RATE INCREASES

The overall vacancy rate in San Antonio’s office market increased to 16.9% in Q2 2026, up 22 basis points from 16.7% in Q1 2026 and down 121 basis points year-over-year. Class A properties reported a vacancy rate of 18.5%, while Class B properties reported 15.6%. Direct vacancy was 16.0%. Among submarkets, CBD posted the highest vacancy rate at 24.0%, while South was tightest at 12.9%.

DELIVERIES DOWN, CONSTRUCTION PIPELINE DOWN

New office deliveries in Q2 2026 totaled 0 sq. ft. down from 40,000 sq. ft. the prior quarter. The under-construction pipeline stands at 60,000 sq. ft. across 1 properties. The pipeline fell 0.0% over the quarter and declined 74.2% year-over-year. The largest project underway is the 60,000-sq.-ft. The Rock Medical and Research Pavilion in Northwest, 58% pre-leased.

INVESTMENT SALES TRENDS

San Antonio office investment sales edged higher in Q2 2026, with nine transactions spanning 12 buildings and 639,570 sq. ft., the strongest of the trailing four quarters and up from 529,494 sq. ft. in Q1 2026. Class A assets accounted for 406,308 sq. ft., or 64% of square footage traded, while the North Central submarket captured 391,580 sq. ft.

The quarter’s largest transaction was Worth & Associates’ disposition of Union Square, a 323,949 sq. ft., two-building campus in North Central, to SynerMark Properties. The asset was 95% leased at closing with a 3.1-year weighted average lease term.

ASKING RENTAL RATES INCREASE

San Antonio’s full-service average rent stands at $29.54 per square foot, up 3.5% for the quarter and up 5.4% year-over-year. At the submarket level, South has the highest average rates, while Northeast has the lowest. On a gross-equivalent basis, Class A asking rents averaged $31.73 per sq. ft. and Class B $26.30.