Subscribe to Our Research Content

  • This field is for validation purposes and should be left unchanged.


Download the PDF


The San Antonio industrial market’s overall vacancy rate increased only 10 basis points quarter-over-quarter at 7.0% and was up by 30 basis points year-over-year.


Vacancy up slightly at 7.0%
The San Antonio industrial market’s overall vacancy rate increased only 10 basis points quarter-over-quarter at 7.0% and was up by 30 basis points year-over-year. Class A space ended the fourth quarter at 20.9% vacancy, up from 19.3% this time last year, based on a total inventory of 16.4 million sq. ft. in 99 existing industrial properties. In addition, overall net absorption registered 448,000 sq. ft., down from 1.3 million sq. ft. this time last quarter, and 844,000 sq. ft. this time last year. There is 2.6 million sq. ft. under construction, with about 27% of that available for lease. Triple net average monthly asking rents recorded $0.56 per sq. ft. in the fourth quarter, unchanged from this time last quarter and up from last year at $0.51 per sq. ft.

Economic indicators
The Federal Reserve Bank of Dallas reported that San Antonio’s metro unemployment rate increased sharply in November to a six-month high of 7.8%, which is below the 8.1% for the state but above the 6.7% for the nation. Net new payrolls in San Antonio increased an annualized 2.5% (6,160 jobs) in the three months ending in November, with mostly positive but weakening growth across sectors. While job gains have been broad based since May, they have not been large enough to offset the losses in March and April. Local consumer spending improved in mid- November and early December, and the number of small businesses open increased briefly around the Thanksgiving holiday. Demand for petroleum made a significant recovery in 2020, bringing prices from brief negative territory to close to $50 a barrel. Some forecasters project oil will end 2021 at $60 a barrel, a level that would mean strong profits for many oil companies.


New supply continues to outpace demand
The San Antonio industrial market has grown to 130.7 million sq. ft., expanding the metro’s inventory by 16.2%— or 18.2 million sq. ft.—in the last five years. The amount of industrial space delivered to the market during Q4 2020 was 579,000 sq. ft., compared to the quarter’s 448,000 sq. ft. of net absorption—a close margin. Net absorption is the measure of total square feet occupied in existing buildings, (indicated as a Move-In) less the total space vacated (indicated as a Move-Out) over a given period. The 2020 full-year net absorption of 4.2 million sq. ft. was comprised almost entirely of Warehouse/Distribution space at positive 4.1 million sq. ft., Flex space tallying positive 142,000 sq. ft., and Manufacturing responsible for negative 80,000 sq. ft.

December’s largest commercial building permits
Permits valued at more than $2 million pulled in December include a $19 million permit for site work at the location of the planned Navistar International Corp. manufacturing facility in South San Antonio, as well as work at USAA and Toyota’s local facilities, reported the San Antonio Business Journal. Navistar, a truck manufacturer, started construction in July 2020 of its $250 million plant with a scheduled opening in spring of 2022, possibly bringing 600 jobs to the San Antonio area. The site for the new 900,000-sq.-ft. plant is located near I-35 and 281 and the frontage road connecting to Mitchell Lake Trailhead.

Manufacturing and ecommerce in Schertz
Schertz is a community with access to a skilled manufacturing workforce of over 70,000. Over the past five years, numerous top Fortune 100 companies have chosen to make major investments in Schertz. Caterpillar, Amazon. com, FedEx, and Sysco have together invested hundreds of millions of dollars and constructed over 3 million sq. ft. of space in the community. As consumer spending increases, so does the need for warehousing/distribution services. Within a 60-minute drive time, fulfillment centers in Schertz can reach over 2.3 million customers. Additionally, Schertz has a relatively young industrial building inventory, with new facilities coming on the market regularly.

Investment sales activity
Real Capital Analytics data reports the fourth quarter sales volume for San Antonio industrial properties was $249.5 million, compared to fourth quarter 2019 at $78.5 million. The primary capital composition for buyers in 2020 was made up of 36.9% private investors, and 33.1% institutional. For sellers, the majority was 72.3% private and 11.6% institutional investors. A significant transaction in Q4 involved HGIT Schertz Parkway LP purchasing the 1,262,294 sq. ft. industrial building occupied by tenant Amazon Fulfillment Center. The single-tenant investment property sold for $129 million or $102.35 per sq. ft., according to CoStar. The Class A property was built in 2013 on a 96-acre parcel with 7.75 years remaining on the lease at the time of sale. The property is located northeast of San Antonio in the fast growing I-35 corridor between San Antonio and Austin.

Leasing activity
The volume of square footage signed during the fourth quarter was at 1.7 million sq. ft.—up from the previous quarter’s 1.4 million sq. ft. Top transactions during the fourth quarter included Amazon signing a deal for 350,000 sq. ft. at 8210 Aviation Landing in Brooks Industrial; a 147,858-sq.- ft. new distribution space lease at 5000-5050 Stout Dr. in the South submarket; and XPO Logistics renewing their lease for 79,947 sq. ft. at 3606 SW 36th St. in Port San Antonio – 333 Morris Witt in the South submarket.

Average asking NNN rent
San Antonio’s Class A industrial market vacancy rate sits at 20.9% to end 2020. With additional space likely coming available in San Antonio, larger industrial tenants will arguably have more leverage than at any time in the last decade with regards to negotiating rental rates, terms, tenant improvements and concessions. If you are an industrial tenant with an upcoming lease expiration, the average “asking” rate has increased, with the triple net average monthly rents at $0.56 per sq. ft., but while landlords will continue to ask for higher rental rates, the actual transacting rental rates are decreasing. Landlords are having to get aggressive on rates and concessions in order to stay competitive. In addition, rental rates may remain elevated, as developers experience rising costs associated with bringing high-quality new projects to the market.

Leta Wauson
Director of Research
tel 713 275 9618

Additional NAI Partners Research Reports

San Antonio Industrial | Monthly Market Snapshot | December 2020
San Antonio Industrial | Monthly Market Snapshot | November 2020

We Want to Hear From You

  • This field is for validation purposes and should be left unchanged.