Subscribe to Our Research Content

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

Share

Download the PDF

Net absorption in the San Antonio retail market went into the red for a second quarter this year—only the fifth time in almost a decade—at negative 168,000 sq. ft. as of Q3 2020.


EXECUTIVE SUMMARY

Occupancy drops to 94.3%
Net absorption in the San Antonio retail market went into the red for a second quarter this year—only the fifth time in almost a decade—at negative 168,000 sq. ft. as of Q3 2020. This was down from positive 80,000 sq. ft. for Q2 2020 and positive 242,000 sq. ft. year-over-year. Leasing activity—which is comprised of both new leases and renewals—included 500,000 sq. ft. of signed deals, up over 90% from this time last quarter, although down almost 25% year-over-year. The overall occupancy rate decreased by 30 basis points quarter-over-quarter, and 90 basis points year-over-year at 94.3%. The retail market saw overall average asking rates rise 3.0% over the past year to finish at $16.29 per sq. ft. on a triple-net basis. A year ago, average rates were at $15.81.

Economic indicators
The Federal Reserve Bank of Dallas reported that San Antonio’s metro unemployment rate ticked down to a still elevated 6.4% in August, lower than the state and national rates of 6.8% and 8.4%, respectively. San Antonio payrolls grew at a nonannualized 2.8% (27,850 jobs) in the three months ending in August, with mixed performance across sectors. Leisure and hospitality experienced the most gains (13.1%, or 13,330 jobs) followed by other services (8.0%, or 2,700 jobs) and trade, transportation and utilities (3.4%, or 6,100 jobs). The mining sector declined at the sharpest rate, contracting 2.7% (-250 jobs). While increases over the past four months have generally been strong, they have not been large enough to offset the losses in March and April. So far this year, employment has declined across all sectors, with total jobs down 5.5%.


MARKET OVERVIEW

Supply and demand
The San Antonio retail market realized net absorption of -168,000 sq. ft. in Q3 2020—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. During July, August and September, 247,000 sq. ft. was delivered to the market, and of the 955,000 sq. ft. of new construction delivered year-to-date, 70% has been leased. Of the 940,000 sq. ft. still in the pipeline, 45% of that space is available.

Investment sales
Real Capital Analytics data reports quarterly retail sales volume for Q3 2020 in the Greater San Antonio area at $27 million involving 6 properties, down compared to this time last year at almost $324 million including 15 properties. The capital composition for buyers in 2020 was made up of 77.6% private investors, and 15.5% institutional investors. For sellers, the majority was 68.5% private investors and 16.0% user/listed investors.

Average asking rents
The retail market in the San Antonio area saw triple net average asking rents at $16.29 per sq. ft. at the end of Q3 2020, a 3.0% increase over the past 12 months. Rent growth has varied across San Antonio submarkets, and with additional space likely coming available in San Antonio, tenants may have more leverage than at any time in the last decade with regards to negotiating rental rates, terms, tenant improvements and concessions. Comal County ($21.13 per sq. ft.) and North Central ($18.56 per sq. ft.) submarkets currently have the highest annual overall average rate, followed by the Far West ($18.18 per sq. ft.).

San Antonio home purchases not slowing down
The San Antonio Board of Realtors reported that home sales are not slowing down as September ended with 3,623 total sales, a 32% increase over September 2019 with 2,744 total sales. There were 3,725 new listings in the month to accompany the 7,107 active listings in the city. Homes were on the market for an average of 53 days, just a one day increase over this time last year. In Bexar County, sales were up 26.5% with 2,566 total sales over September 2019 with 1,986 total sales. San Antonio entered the month of October with 3,036 pending sales.


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

We Want to Hear From You

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