San Antonio’s Retail Market Remains Tight
EXECUTIVE SUMMARY
Despite increased vacancy and deliveries, lower rents, and lower leasing activity, San Antonio’s retail market remains healthy, with positive fundamentals continuing. Leasing activity for Q3 2025 totaled 632,968 sq. ft., a 16.6% quarterly decrease and a 22.2% annual increase, but still a fair amount for the market. Net absorption rose 1.7% quarterly, posting 81,810 sq. ft., pushing the year-to-date total net absorption to 364,800 sq. ft. The vacancy rate rose 20 basis points quarterly and 30 basis points annually to 4.3%. Low vacancy reinforces the landlord-favorable dynamics in the market.
Investment activity remained steady with 252 properties sold over the past year, averaging $203 per sq. ft. and a cap rate of 7.0%. Average rental rates dropped 3.2% quarter-over-quarter and 1.6% year-over-year, settling at $19.16 per sq. ft. (NNN), well above the historic average. Deliveries outpaced demand in Q3, and construction activity remained brisk with 1.4 million sq. ft. in the pipeline. 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 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 (8,700 jobs) and government (8,100 jobs). The mining sector lost 6,400 jobs.
MARKET OVERVIEW
LEASING ACTIVITY DECREASED OVER THE QUARTER
Leasing activity slowed in Q3, down 16.6% quarter over quarter to 632,968 sq. ft. This was down 22.2% from Q3 2024. Notable leases recently signed include Crunch Fitness, which signed a 33,000 sq. ft. lease at Northern Hills shopping center; EOS Fitness, which signed a 30,000 sq. ft. lease at The Village at the Summit shopping center; and Pizza Ranch, which signed a 16,000 sq. ft. lease at 5303 Walzem Rd.
NET ABSORPTION POSITIVE FOR THE QUARTER
Net Absorption increased by 1.7% over the quarter to 81,810 sq. ft. but decreased by 56.8% year-over-year. Notable move-ins during the third quarter include Dick’s Sporting Goods taking 187,000 sq. ft. at Live Oak Town Center, Home Depot moving into 105,000 sq. ft. at 2607 W Loop 1604, and Planet Fitness moving into 50,000 sq. ft. at Westwood Center shopping center.
VACANCY RATE REMAINS LOW AT 4.3%
The overall vacancy rate in San Antonio’s Retail market is 4.3%, up 20 basis points quarterly and 30 basis points annually. Like most major Retail markets nationwide, vacancy is near record lows, giving retail tenants looking to expand limited options. San Antonio’s vacancy rate has remained under 5% since mid-2021.
DELIVERIES INCREASED AND THE CONSTRUCTION PIPELINE DECREASED
New deliveries for Q3 2025 were up sharply by 156.7% over the quarter, with 430,247 sq. ft. of new product completed. There is currently 1.4 million sq. ft. in the construction pipeline, down 12.4% quarterly and up 53.3% annually. The new supply, along with future deliveries, should help demand remain balanced, and market fundamentals are expected to remain strongly landlord-favorable for the foreseeable future.
INVESTMENT SALES TRENDS
CoStar Capital Market Analytics reports that the cumulative 12-month sales volume at the end of the third quarter in the San Antonio retail market was $122 million. With 262 deals completed, the average transaction price currently stands at $203 per sq. ft., and the average capitalization rate is 7.0%. Notable sale transactions in Q3 2025 include a 104,000 sq. ft. JCPenney store in Creekside Town Center. This was part of a 2-property portfolio sale, sold to NewQuest Properties from Copper Property CTL Pass Through Trust for a reported $4.9 million. Also, the 31,225 sq. ft. San Pedro Place shopping center was purchased by Sadan Pant from THF Holdings, LLC for an undisclosed amount.
RENTAL RATES DROP 3.2% QUARTERLY AND 6.1% ANNUALLY
The average monthly rental rate (NNN) for San Antonio’s retail market is $19.16 per square foot. This represents a 1.6% decrease over the past year and is 4.9% below the all-time historical high. With vacancy rates low and steady construction activity, rates are expected to remain relatively flat in the near term.
For More Information, Contact:
Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]
