2016 was a year that moved the San Antonio commercial real estate market in the right direction. The office market recorded net absorption of more than 1.1 million sq. ft., and also produced positive absorption in every quarter of the year. The vacancy rate dropped to 13.9% and the average asking rent came in at $21.00 per sq. ft. While San Antonio’s office market has grown slower than those of Austin, Dallas and Houston, the continued increase in population has created demand, and subsequently the market has delivered the supply to meet that demand. A total of 37 new buildings were delivered to the market in 2016 totaling 812,215 sq. ft., with 1,042,578 sq. ft. still under construction. This growth is derived from major local expansions in the CBD and Northwest submarkets along with new inventory that is being delivered.
Notable 2016 deliveries include 19026 Ridgewood Parkway, a 147,000-sq.-ft. facility that is now 43% occupied, and West Ridge Two at La Cantera, a 129,015-sq.-ft. building that is completely occupied by USAA. The largest projects underway at the end of Q4 2016 were Security Service Federal Credit Union, a 270,000-sq.-ft. building with 100% of its space pre-leased, and Landmark One, a 164,351-sq.-ft. facility.
The market’s expansions included Southwest Business Corporation moving into 69,972 sq. ft. at 4300 Centerview Dr., and West Facilities, LLC moving into 59,841 sq. ft. at 11330 W Interstate 10, while one of the most significant transactions came in the form of San Antonio’s electric utility, CPS Energy, buying two dormant office towers at 500/530 McCullough totaling over 430,000 sq. ft. to serve as itsnew headquarters. Weston Urban bought the historic Milam Building with plans to renovate its 211,000 sq. ft. of office space to apartments with first floor retail. These two events removed over 500,000 sq. ft. from the office market, with the Milam Building conversion serving as an example of the rise of the western CBD, followed by the successful revival of the Rand Building and the anticipated new Frost Bank Tower and San Pedro Creek improvements being fully underway in 2017.
In River North, GrayStreet Partners purchased the 60,000-sq.-ft. Light Building with plans that target innovative and technology-oriented office space users, and Silver Ventures has a new office/retail development in the works at the Pearl, totaling ±350,000 sq. ft. All of these developments created tremendous growth opportunities for the city, and with a focus on more expansion in 2017 San Antonio definitely remains a city on the rise.