EXECUTIVE SUMMARY

San Antonio’s retail market remains tight, with positive fundamentals, including low vacancy and a balanced supply-and-demand dynamic. Vacancy remained at 4.2%, and positive net absorption decreased 14.8% over the quarter to 337,549 sq. ft., but was up 15.5% annually. Leasing activity remained relatively steady over the quarter, dropping 2.5% to 556,633 sq. ft. 

Deliveries were up 65.6%, adding 390,389 sq. ft. to inventory, and construction activity slowed 6.3% over the quarter with 966,807 sq. ft. in the pipeline. Average rental rates rose 0.4% quarter-over-quarter, but were down 3.5% year-over-year, settling at $19.45 per sq. ft. (NNN). Investment activity decreased, with 287 properties sold over the past year, averaging $211 per sq. ft. and a 7.2% cap rate. Low vacancy reinforces the landlord-favorable dynamics in the market. San Antonio’s retail market remains healthy and is poised for sustained growth and continued investor interest. 

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 December 2025 to 4.3% in January 2026. The unemployment rate in Texas jumped from 3.9% to 4.5% over the same period. San Antonio added 5100 jobs over the year, a 0.4% change. Sectors with the largest January gains included Construction, Private Education and Health Services, and Other Services. The sectors with job losses were Trade, Transportation, and Utilities; Government; Financial Activities; Leisure and Hospitality; Information; Manufacturing; and Professional and Business Services.

Vacancy Remains at 4.2%

The overall vacancy rate in San Antonio’s Retail market is 4.2%, unchanged from the previous quarter and up 10 basis points annually. Like most major Retail markets nationwide, vacancy is near record lows. Further, the construction pipeline is down, leaving retail tenants with limited options to expand. San Antonio’s vacancy rate has remained under 5% since mid-2021.

Net Absorption Down Quarterly and Up Annually

Net Absorption decreased 14.8% over the quarter, but was up 15.5% annually to 337,549 sq. ft. Notable move-ins during the first quarter include Trufit Athletic Clubs taking 35,000 sq. ft. at Lockhill Village Shopping Center in the Northwest submarket, Sports Clip moving into 34,000 sq. ft. in The Shops at Dove Creek in the Far West submarket, and Texas Thrift moving into 33,000 sq. ft. at Ingram Square in the Northwest submarket.

Leasing Activity Slightly Down

Leasing activity decreased slightly in Q1, down 2.5% quarter over quarter to 556,633 sq. ft. Notable leases recently signed include Crunch Fitness, signing a 35,000 sq. ft. lease at 11446 Potranco Rd, in the Far West submarket; Door Buster Deals, which signed a 31,300 sq. ft. lease at Northtowne Plaza in the North Central Submarket; and Marshalls renewed 30,000 sq. ft. at Northwoods Shopping Center in the North Central submarket.

Deliveries Up and Construction Pipeline Down

New deliveries for Q1 2026 were up 65.6% quarter over quarter and 3.8% annually, totaling 390,289 sq. ft. There is currently 966,807 sq. ft. in the construction pipeline, down 16.3% quarter over quarter and 18.5% annually. The lack of new supply, along with a balanced supply-and-demand dynamic, is expected to constrain tenants looking to expand in the market.

Investment Sales Trends

CoStar Capital Market Analytics reports that the cumulative 12-month sales volume at the end of the first quarter in the San Antonio retail market was $244 million, a sharp decrease from the fourth quarter’s 12-month volume of $468 million. With 287 deals completed, the average transaction price is $211 per sq. ft., and the average capitalization rate is 7.2%. Notable sale transactions in Q1 2026 include NETSTREIT Corp’s acquisition of a 3-property portfolio, which included South Park Mall II located at 2310 SW Military Dr. Cornerstone Commercial Properties was the seller. The price was not disclosed. Also, Crockett Development, Inc. sold a 26,867 sq. ft. retail building located at 235 E. Commerce St. to Waxy’s for a reported $223 per sq. ft.

Rental Rates Increase

The average monthly rental rate (NNN) for San Antonio’s retail market increased 0.4% quarterly, but was down 3.5% annually to $19.45 per sq. ft. ft. The highest average asking rental rate is $33.47 per sq. ft. in the CBD submarket, while the lowest asking rate is $14.98 per sq. ft. in the Far West submarket. With low vacancy rates and low inventory, rates should rise in the near term.