San Antonio’s Office Market Absorption Turns Positive, Rental Rates Continue to Rise

EXECUTIVE SUMMARY

San Antonio’s office market experienced a marginal decrease of 10 basis points in vacancy, and net absorption turned positive, recording 30,551 sq. ft. in Q3 2025. The construction pipeline remained steady with 227,400 sq. ft. under construction and only 48,000 sq. ft. delivered in the third quarter.

Leasing activity increased moderately by 19.7%, to 514,385 sq. ft. in Q3, but it was down 23.7% from one year ago. On the rental front, San Antonio’s average full-service asking rent increased to $27.92 per sq. ft., up 0.7% quarterly and 14.8% annually.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

SAN ANTONIO ECONOMIC UPDATE 

According to the U.S. Bureau of Labor Statistics, the San Antonio unemployment rate increased from 3.7% in May 2025 to 4.1% in August 2025. The unemployment rate in Texas remained at 4.1%. The San Antonio Business-Cycle Index, a gauge of economic conditions in the metro area, increased an annualized 8.1% in August. 

San Antonio payrolls rose in August, increasing at an annualized rate of 6.6%. From May through August, payrolls grew 4.1% (12,100 jobs), driven by gains in education and health services, which added 8,700 jobs, and government, which added 8,100 jobs. The mining sector lost 6,400 jobs.

MARKET OVERVIEW 

NET ABSORPTION TURNS POSITIVE

Net absorption—move-ins minus move-outs—turned positive, recording 30,551 sq. ft. for the quarter. This was a significant increase from the -185,335 sq. ft. of negative absorption posted in the previous quarter. Class A properties recorded 59,847 sq. ft. of positive net absorption, while Class B properties posted negative absorption of -29,296 sq. ft. The Northwest Class A submarket recorded the most positive absorption, 106,171 sq. ft., while the CBD Class A submarket posted the highest amount of negative absorption, recording -78,012 sq. ft.

DELIVERIES UP FOR THE QUARTER AND CONSTRUCTION PIPELINE RELATIVELY FLAT IN Q3 2025

Deliveries for the quarter totaled 48,000 sq. ft., and 227,400 sq. ft. of new construction is currently underway.  This represented a 1.8% decrease over the past quarter and a 45% decrease annually. The properties under construction are concentrated in the Northwest and South submarkets.

LEASING ACTIVITY UP QUARTERLY, DOWN ANNUALLY 

Leasing activity came in at 514,385 sq. ft. in Q3 2025, up 19.7% from the previous quarter and down 23.7% from Q3 2024. Notable leases in Q3 2025 included The Center for Health Care Services at 2535 SE Military Dr, Alamo Group’s 42,000 sq. ft. lease at IBEX Global office building, and Mytech Partners’ 21,000 SF lease at Centre Plaza. 

VACANCY RATE DECREASES 10 BASIS POINTS 

The overall vacancy rate in San Antonio’s office market decreased 10 basis points to 17.8% in Q3 2025, primarily due to positive absorption. Also, vacant sublease space, which has been a drag on the market, has decreased significantly over recent years and now stands at 360,000 sq. ft., well below the peak level of 1.3 million sq. ft. in Q1 2022.

INVESTMENT SALES TRENDS

CoStar Capital Market Analytics reports a cumulative 12-month sales volume of $108 million for Q3 2025. Over the past year, 69 office properties were sold, with an average price of $226 per square foot and an average capitalization rate of 6.7%. Notable sales transactions in the third quarter include SageView Partners, LLC’s purchase of the 3-building office portfolio totaling 381,400 sq. ft. The Forum Offices are located at 8000 IH-10 W in the Northwest submarket. Also, The University of Texas System acquired the 263,000 sq. ft. One Riverwalk Place office building, located at 700 N Saint Mary’s St in the CBD submarket.

RENT GROWTH REACHES ALL-TIME HIGHS AGAIN 
San Antonio’s full-service average rent stands at $27.92 per sq. ft., which is up 14.8% over the past year.  Asking rents for Class A and Class B space are $29.71 per sq. ft. and $25.80 per sq. ft., respectively. Despite limited demand over the past few quarters, Class A rates increased by about 9.5% over the past year, while Class B rates rose by 16.7%.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]