U.S. Bureau of Labor Statistics<\/a> reports job growth and weekly earnings grew last year. In addition, San Antonio is not overly dependent on one industry.<\/p>\n\u201cSan Antonio is a pretty resilient economy, and that plays to our favor when we have rough economic times,\u201d Khalil told real estate professionals at a recent meeting hosted by several local real estate organizations, including Commercial Real Estate Women.\u00a0<\/p>\n
\u201cWe\u2019re the steady Eddie market, and we\u2019ve lived up to our reputation over the past few quarters.\u201d<\/p>\n
Here are some takeaways by sector from Khalil\u2019s presentation.<\/p>\n
Multifamily is a tenants\u2019 market right now<\/p>\n
With 15.7% vacant, San Antonio is currently the most vacant major multifamily market right now, surpassing Austin, which is at 14%. Houston sits at 12.7% and Dallas\/Fort Worth at 12.4%.<\/p>\n
\u201cOf course, no one wants to be on top of this chart,\u201d Khalil said. But it\u2019s a reflection of a building spree in recent years versus any kind of drop in demand.\u00a0<\/p>\n
Most of the vacancies are concentrated in parts of the region that are growing, including Northwest San Antonio and New Braunfels where the highest number of new apartments have been completed in the last two years. In areas with low vacancy rates, fewer apartments have been built.\u00a0<\/p>\n
He said 72% of properties in San Antonio are offering some sort of concession to tenants, such as the first month\u2019s rent free.\u00a0<\/p>\n
And newer apartment buildings aren\u2019t the only properties struggling to attract renters, leading to fierce competition.\u00a0<\/p>\n
The average property built in 2021 is still over 10% vacant, Khalil said. \u201cA lot of this is because of supply. It\u2019s not necessarily because we\u2019re seeing negative demand. It\u2019s very much a tenants\u2019 market right now.<\/p>\n
\u201cBut I do not anticipate it staying that way,\u201d he said, given the steady population growth and that multi-family construction projects have leveled off.<\/p>\n
Real estate broker Marianna Lujan said she found the vacancy data surprising. \u201cI own a small apartment complex downtown, and I consistently stay full,\u201d she said. \u201cBut I think it\u2019s also because it\u2019s in King William. It\u2019s a very desirable area. Most of the people are all working in the area \u2026 they rather just walk to work.\u201d<\/p>\n
Retail is well-occupied but not in all segments<\/p>\n
The busiest shopping center in all of San Antonio, based on foot traffic, is a sprawling retail mecca built in a former rock quarry on the city\u2019s far North Side.<\/p>\n
The commercial real estate company JLL announced recently that The Rim, with its both big-box and specialty stores, attracts more shoppers than any other mall or marketplace in the city.\u00a0<\/p>\n
It has also attracted plenty of retailers, resulting in a vacancy rate of less than 5% at the open-air shopping center near La Cantera and Six Flags Fiesta Texas.<\/p>\n
Population growth has led to an expanding consumer base, Khalil said. \u201cThat\u2019s very important for retail real estate, and that\u2019s very important for CRE more broadly. We\u2019re up there growing faster than even significantly smaller states like Utah, Delaware and Washington.\u201d<\/p>\n
But San Antonio builders and retailers are not adding retail space to keep pace with the rising demand, a phenomenon that began with the rise of Amazon and e-commerce.\u00a0<\/p>\n
\u201cWe\u2019re kicking off less than 1.5 million square feet on an annual basis, and the amount of retail square footage we have per person continues to go down in San Antonio, so it\u2019s a pretty well occupied retail market,\u201d Khalil said.<\/p>\n
What is available is \u201ceagerly absorbed\u201d by tenants, he added, including those that are growing nationally like Dollar General, O\u2019Reilly, Auto Zone, Skechers and Dollar Tree.\u00a0<\/p>\n
\u201cIt\u2019s a lot of economy-oriented retailers right now, and they\u2019re opening up shop in San Antonio,\u201d Khalil said. \u201cI think that speaks to the confidence of many of these national retailers about the San Antonio market. They want to be here.\u201d<\/p>\n
Office market is healthy, consistent<\/p>\n
In San Antonio\u2019s office sector, there\u2019s a demand for the top-tier in quality, Class A and higher, as well as the older, lower-priced properties, leaving the aging, 1980s-era office space fighting for tenants.\u00a0<\/p>\n
\u201cRight now, a lot of people, if they can afford it, are moving to the Class A spaces, and if they can\u2019t afford it, they just stay where they are,\u201d Khalil said. \u201cSo it\u2019s kind of a hollowing out of the middle in some ways.\u201d<\/p>\n
Overall, the region\u2019s diverse and resilient economy and steady job growth contribute to a healthy office market, he said, so office leasing has been fairly consistent and above the pre-pandemic 2019 average.<\/p>\n
Khalil said there are only five speculative office buildings currently under construction in the area and two are for medical use. Instead, the new office market is dominated by properties being built for a specific tenant and use, such as a dental office.\u00a0<\/p>\n
Industrial market construction has slowed<\/p>\n
Just as in the multi-family sector, the industrial real estate market is still coping with over-building within the past few years, leaving the region with some of the nation\u2019s highest vacancy rates at 10%. Warehouses and distribution centers that are 100,000 square feet or larger are pushing up the vacancy trend.\u00a0<\/p>\n
\u201cBecause of all that building and all that big space we\u2019ve added to our market, vacancies are quite high in San Antonio and Central Texas [and Austin],\u201d Khalil said. Austin\u2019s industrial vacancy rate is the highest in the nation at 14%.<\/p>\n
A year ago, a new Amazon facility spurred a construction boom east of San Antonio before industrial growth shifted again to the northeast part of the region where major highways intersect. \u201cOur backbone is probably always going to be logistics, just given our very strategic location in the South Central portion of the U.S, and location very close to the Port of Laredo,\u201d he said.<\/p>\n
But new industrial construction has begun to be more spread out across the San Antonio metropolitan area, and to the west, as more large data centers are built.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"It\u2019s a renter\u2019s market \u2014 at least for now.\u00a0 But the full picture of San Antonio\u2019s commercial real…\n","protected":false},"author":2,"featured_media":202045,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[79646,79647,51119,33608,918,79648,82,84,83,79649,10770,79650,79651,92,3028,41750],"class_list":["post-202044","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-antonio","tag-commercial-real-estate-market","tag-commercial-real-estate-women","tag-costar","tag-danny-khalil","tag-economy","tag-multifamily-development","tag-san-antonio","tag-san-antonio-headlines","tag-san-antonio-news","tag-san-antonio-office-space","tag-san-antonio-real-estate","tag-san-antonio-retail","tag-san-antonio-shopping-centers","tag-top-story","tag-typedaily","tag-u-s-census-bureau"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/202044","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/comments?post=202044"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/202044\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media\/202045"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media?parent=202044"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/categories?post=202044"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/tags?post=202044"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}