San Antonio’s Retail Market remains as resilient and relentless as the summer heat as vacancies continue to tighten and economy trends positive. 

EXECUTIVE SUMMARY

CONSISTENT RETAIL DEMAND
As the first half of 2022 came to a close, the San Antonio retail market showed continued improvement. Namely, 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-increased in the second quarter by almost ten-fold to nearly 600,000 sq. ft., compared to Q2 2021 at 66,000 sq. ft. San Antonio’s retail market has remained resilient, despite the coronavirus  pandemic. Vacancies continue to tighten at 4.4%, and net absorption has stayed positive for four consecutive quarters. With 746,000 sq. ft. delivered so far in 2022, 947,000 sq. ft. under construction, and another 2.2 million sq. ft. of proposed projects announced through 2023, the demand for retail real estate may continue to outpace supply.

SAN ANTONIO ECONOMY REMAINS POSITIVE
The San Antonio unemployment rate increased in May to 4.0%. The metro’s unemployment rate is above the U.S. jobless figure of 3.6% but below the state rate of 4.2%. San Antonio payrolls expanded an annualized 2.1% (5,800 jobs) over the three months ending in May. Among the major sectors, mining led growth with an increase of 11.3% (162 jobs). It was followed by manufacturing, up 10.6% (1,340 jobs), and financial activities, up 7.6% (1,745 jobs). Sectors that posted declines were construction (-6.8%, or 1,035 jobs), trade, transportation, and utilities (-1.0%, or 499 jobs), and professional and business services (-0.7%, or 255 jobs). With the increase in May employment, San Antonio has gained approximately 148,700 jobs since the lowest point of the pandemic in April 2020 and surpassed pre-pandemic employment.

MARKET OVERVIEW

DEMAND CONTINUES TO OUTPACE SUPPLY
The San Antonio retail market realized net absorption of almost 600,000 sq. ft. in Q2 2022, the fourth consecutive quarter that demand (net absorption) 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 746,000 sq. ft. was delivered to the market, with 83% of the space spoken for. Of the 763,000 sq. ft. still in he pipeline, about 30% of space is available. Some of the significant transactions that took place in Q2 were H-E-B’s renewal of its lease for 98,954 sq. ft. at 3418  E. Southcross Blvd., and Ollie’s Bargain Outlet moving into 35,000 sq. ft. at 7014 FM 78.

INVESTMENT SALES TRENDS
Real Capital Analytics data reports that the cumulative monthly sales volume in the greater San Antonio area is at $200.7 million as of June 20, 2022, down about 30% compared to last year at $287.3 million. The primary capital composition for buyers in 2022 is made up of 87% private investors  and 11% institutional. For sellers, the majority were 92% private investors and 8% REIT/listed. A recent noteworthy transaction included PBC Interests acquiring the 126,000-sq.-ft. Seguin Crossroads Shopping Center positioned along the State Highway 123 bypass. The property was nearly 70% unoccupied when PBC Interests entered the deal. Seguin’s retail trade area includes a population of more than 120,000 people. The city is a retail hub for portions of Guadalupe, Gonzales, and Wilson Counties, and it’s one of the only major retail stops between San Antonio and Houston along Interstate 10.

2022 CONTINUES TO SEE AN INCREASE IN HOME PRICES FOR SAN ANTONIO

According to the San Antonio Board of Realtors, although there was a slight decrease in sales, the San Antonio area continued to see an increase in median and average home prices. In June, there was an 18% increase in average home prices and a 20% increase in median prices compared to a year ago. The area also saw a 14% increase in price per square foot. 100.9% of homes sold for the list price and stayed on the market for an average of 29 days. The San Antonio area saw a 9% decrease in home sales compared to this time last year. At the end of June, there were 5,399 new listings, 7,721 active listings, and 3,036 pending sales.

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