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San Antonio retail

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San Antonio Retail investment sales volume up 1,815% year-over-year.


EXECUTIVE SUMMARY

Occupancy decreases slightly
San Antonio retail overall occupancy decreased by 10 basis points quarter-over-quarter to 94.1%, and 60 basis points year-over-year. Net absorption in the San Antonio retail market ended Q2 2021 at 28,000 sq. ft.—down from 190,000 sq. ft. in Q1 2021. San Antonio retail Leasing activity—which is comprised of both new leases and renewals—included 613,000 sq. ft. of signed deals during the second quarter, an increase from this time last quarter, and last year. The retail market saw overall average asking rates increase by $0.20 per sq. ft. quarter-over-quarter to finish at $16.65 on a triple-net basis. A year ago, average rates were at $16.83.

Economic indicators
The Federal Reserve Bank of Dallas (FRBD) reported that the San Antonio metro’s unemployment rate declined to 5.7% in May, the lowest since March 2020. The state’s jobless rate fell to 6.5%, and the nation’s rate ticked down to 5.8%. Since early February 2021, consumer spending has remained generally above January 2020 levels, except for the brief dip to below prepandemic levels during the week of Winter Storm Uri in mid-February. Spending in recent weeks has generally moved sideways. As of May 30, spending was 15.5% higher in Bexar County and 13.3% higher in Texas relative to January 2020.

 


MARKET OVERVIEW

Supply continues to outpace demand
The San Antonio retail market realized net absorption—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—of 30,000 sq. ft. in Q2 2021. This is the sixth straight quarter, since Q1 2020 that supply has outpaced demand. Total net absorption year-to-date is 613,000 sq. ft. So far in 2021, a total of 404,000 sq. ft. was delivered to the market with 76% of that space occupied. Of the more than 1 million sq. ft. still in the pipeline, about 37% of the space is available.

Investment sales
Real Capital Analytics data reports quarterly retail sales volume for Q2 2021 in the Greater San Antonio area at $249 million involving eight properties, up considerably compared to this time last year at $13 million across 3 properties. The capital composition for buyers so far in 2021 was made up of 73.3% REIN/listed investors and 21.4% private investors. For sellers, 74.1% were institutional investors, 13.4% private, and 6.8% REIT/listed. In May, Big V Property Group, along with partners Kimco Realty and Equity Street Capital, completed the acquisition of The RIM Shopping Center for approximately $219.7 million. The acquisition consists of almost 1.1 million sq. ft. of premiere retail and restaurant space at one of the largest mixed-use/lifestyle centers in Texas, and the 10th most visited center in the United States.

Average asking rents
The retail market in the San Antonio area saw triple net average asking rents at $16.65 per sq. ft. to end Q2 2021, a 1.1% decrease over the past 12 months. Rent growth has varied across San Antonio submarkets with Comal County ($21.37 per sq. ft.) and the Far West ($21.32 per sq. ft.) submarkets currently having the highest annual overall average rates, followed by the Central Business District ($20.48 per sq. ft.).

Metro home sales are up
The FRBD reported that metro existing-home sales accelerated in May (3.4% month/month) after expanding at a mild 0.4% pace in April. In the state, sales activity rose 2.9% in May. In the first five months of 2021, the metro’s home sales were up 18.9% compared with the same period in 2020—slightly below the state’s 20.3% increase. The median price of homes sold in the metro in May was $272,613—a 10.3% increase year over year. In the state, the median home price in May was $293,327, a 15.9% jump.


Leta Wauson
Director of Research
leta.wauson@naipartners.com
tel 713 275 9618

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