San Antonio Retail Market starts 2022 strong as demand outpaces supply.

EXECUTIVE SUMMARY

CONSISTENT RETAIL DEMAND 
As the first quarter of 2022 ended, the San Antonio retail market showed signs of improvement. Namely, leasing volume increased in the first quarter by almost 100% to 878,000 sq. ft., compared to Q1 2021 at 449,000 sq. ft. Additionally, net absorption—the measure of total square feet occupied in existing buildings (indicated as a move-in) less the total space vacated (shown as a move-out) over a given period—totaled 475,000 sq. ft. in Q1 2021—a 67% increase from a year ago at this time. San Antonio’s retail market has remained resilient, despite the coronavirus pandemic. Vacancies have remained tight, and net absorption has stayed positive for six consecutive quarters. With 411,000 sq. ft. delivered so far in 2022, 763,000 sq. ft. under construction, and another 3 million sq. ft. of proposed projects announced, the demand for retail real estate may continue to increase outpace supply.

SAN ANTONIO ECONOMY REMAINS POSITIVE
The metro’s unemployment rate remained constant in January at 4.1%, one of the lowest rates since the start of the pandemic. For comparison, the state’s jobless rate was at 4.8%, while the nation’s rate increased slightly to 4.0%. San Antonio payrolls expanded among the major sectors, with leisure and hospitality leading three-month growth (12.0%, or 3,723 jobs). In March and April 2020 combined, 138,332 jobs were lost in the metro as the pandemic hit. As of January 2022, 99.5% of those jobs had been recovered. San Antonio’s dining activity fell briefly near the beginning of 2022 but has since strongly recovered. While January 2022 saw dining levels fall as far as 15.2% below 2019 levels, local dining activity is now 21.0% higher than it was three years ago..

MARKET OVERVIEW

DEMAND CONTINUES TO OUTPACE SUPPLY
The San Antonio retail market realized net absorption of 475,000 sq. ft. in Q1 2022, the third consecutive quarter that demand outpaced supply. Prior to Q3 2021, supply had surpassed net absorption since Q4 2019, or seven straight quarters. So far, in 2022, a total of 411,000 sq. ft. was delivered to the market, with almost 80% of that space spoken for. Of the 763,000 sq. ft. still in the pipeline, about 36% of space is available.

INVESTMENT SALES TRENDS
Real Capital Analytics data reports that the cumulative monthly sales volume in the greater San Antonio area is at $73 million as of February 28, 2022, almost four times the amount compared to this time last year at $19 million. The primary capital composition for buyers in 2022 is made up of 52% REIT/listed and 17% institutional investors. For sellers, the majority were 38% institutional and 31% REIT/listed investors. A recent noteworthy transaction included Reserve at Mockingbird Heights acquiring the 247,576-sq.-ft. New Braunfels Marketplace retail community center at 651 N. I-35 in March. The property was 95.6% leased at the time of sale to major tenants Golds Gym, Santikos Entertainment, Ashley HomeStore, and Tuesday Morning.

SAN ANTONIO AREA HOUSING MARKET ENDED 2021 STRONG
According to the San Antonio Board of Realtors, home sales are still moving forward in the San Antonio metro area. The average price saw a 16% increase to $361,889, and the median price increased to $314,000, a 20% increase from 2021. Even with these large increases, the area saw a 9% increase in total closed sales, with 2,681 homes sold. The month closed with 3,437 new listings, 4,054 active listings, and 3,209 pending sales. The price per square foot increased to $176, a 20% increase from 2021. The average home stayed on the market for 38 days, a decrease of 14 days from 2021. Bexar County reported that the average price for the area increased 14.1% to $333,258 and the median price increased to $290,000, a 16% increase. 1,853 homes were sold, a 7.7% increase from 2021. 99.7% of homes were sold for list price and the price per square foot increased to $164.

Leta Wauson
Director of Research
[email protected]
tel 713 275 9618