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Office market indicators remain strong into 2018. The San Antonio office market vacancy rate stood at 10.2% midway through the first quarter—up slightly from 10.0% as of the end of Q4 2017—with year-to-date net absorption in the red at negative 236,046 sq. ft., and no new space delivered to the market. Contributing to negative absorption was 65,800 sq. ft. of sublease space placed back on the market in First Park Ten Tech Center, and 60,000 sq. ft. of vacant space available in South Texas Medical Center. The amount of space under construction totaled 838,647 sq. ft., with 451,366 sq. ft., or 53.8% of that space available for lease. The quoted average full-service rent is $21.99 per sq. ft. for existing space—up from $21.71—while the asking rent for new space is around $30.00 per sq. ft.
San Antonio office sales volume up 96.1% year-over-year. Real Capital Analytics data reports 2017 office sales volume in the San Antonio area at $779.2 million, resulting in a year-over-year change of 96.1%. The buyer composition is made up of 49% private, 19% institutional, 16% user/other, and 14% public listed/REITs.
Modern tech startups eyeing historic Milam Building. The 21-story Milam Building is a downtown landmark, built in 1928 at 115 E. Travis St. Major renovations are planned for the office tower, in hopes of attracting growing tech companies seeking accommodating office space. One such tech company already leasing space in the building is Code2Revenue. Renovations at the Milam Building are expected to begin by Fall 2018.
Labor force grew the fastest of the state’s major metros. The San Antonio economy grew at a robust pace in December. Jobs surged, and the area unemployment rate dropped slightly to 3.8% after rising to a revised 3.9% in November. The state rate picked up marginally to 3.9%, while the U.S. rate held steady at 4.1%. The San Antonio labor force grew at a strong 3.4% last year, well above Texas’ 1.4% stride and the fastest of any of the state’s major metros.
Director of Research
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