Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.
Issue link: https://texasrealestatebusiness.epubxp.com/i/591312
www.REBusinessOnline.com Texas Real Estate Business • November 2015 • 39 Although San Antonio is the sev- enth largest city in the nation, to a large degree it has maintained a small town atmosphere. That certainly ap- plies to the commercial real estate industry. Unlike many brokers in the bigger cities who specialize in a par- ticular product type or even one sub- market, most commercial brokers in San Antonio wear a lot of hats. Because we stretch our expertise to include multiple product types and extend our coverage beyond the met- ro area to include the broader expanse of south Texas, we tend to look at the market in totality rather than in spe- cifc bits and pieces. For that reason, it is valuable to step back from time to time and examine the overall perfor- mance of the Alamo City. In general, the San Antonio real estate market is on a roll. On the residential side, the housing market continues to post record-breaking numbers due to low supply and high demand. In May, the median price of a single-family home topped $200,000 for the frst time. In June, 2,925 homes were sold — a record according to the San Antonio Board of Realtors. Metrostudy reported double-digit in- creases in the number of new-home closings over the past 12 months ending in the second quarter. A total of 9,319 new homes were purchased during that period for an annual in- crease of 13 percent. Construction starts on new homes between the second quarter of 2014 and the second quarter of 2015 in- creased 10 percent to reach 9,431, and the numbers would have been even stronger had it not been for signifcant rainfall that delayed completion of lots and slowed starts. Sector by Sector In the apartment market, citywide occupancy has risen to 93.2 percent, according to Austin Investor Inter- ests. This is the highest quarterly oc- cupancy seen since 2012, and before that, since 2000. Improved occupancy is even more impressive considering that it comes amidst high levels of construction. Currently, there are 46 properties with more than 11,400 units under construction throughout the metro area. Roughly 7,300 of those will reach completion over the next 12 months, while 5,500 more will get started. Meanwhile, rental rates continue to increase. The current average of $1.05 per square foot is up 1.6 percent over last quarter. In the commercial market, all prod- uct types experienced positive net absorption in the second quarter, and demand continues to drive new con- struction. Two new ofce buildings were delivered in the second quar- ter, the 125,526-square-foot Lockhill Crossing and the 80,569-square-foot Oaks at University Park 3, both lo- cated in the northwest sector. Com- bined, the buildings came online roughly 29 percent pre-leased. Com- bined with the 8100 Potranco Road building, which was completed in the frst quarter, new construction added more than 365,000 square feet of ofce space to the market in the frst half of the year. New leases and expansions trans- lated into more than 300,000 square feet of positive net absorption, indi- cating that demand for space is nearly keeping pace with new supply. The challenge ahead will be for demand to keep up with more than 700,000 square feet of ofce space currently under construction and scheduled to come online over the next six months. Optimistic that demand for well-lo- cated, high-quality product exists, de- velopers have recently unveiled plans for several additional projects such as Landmark One, Vista Corporate Park, The Ofces at The Rim, Dry Creek Crossing and Westover Ofce II. The biggest buzz, however, came from downtown, where the City of San Antonio, Weston Urban and Frost Bank announced plans for a new 400,000-square-foot ofce tower which Frost will anchor. The new Frost Tow- er will be the frst major downtown ofce building constructed since the 1980s. In the industrial market, two new projects were delivered in the second quarter. In the north-central sector, 66,405-square-foot Thousand Oaks Business Park 4 came online and is anchored by Interceramic Tile, which occupies 53,061 square feet. In the south, a 60,000 square-foot build-to-suit for Custom Fab was de- livered at South Park Business Park, which is located at 7030 Old Pears- all Road. Combined with frst quar- ter completions, more than 484,000 square feet of new industrial lease space has been added to the market this year. The San Antonio industrial market closed the second quarter with a citywide vacancy rate of 8.4 percent, compared to 5.9 percent recorded a year ago. Vacancy is up because new supply has outpaced demand — but not by far. Over the past four quarters, the market experienced nearly 639,000 square feet of positive net absorption ofset by more than 863,000 square feet of new inventory. The San Antonio retail market closed the second quarter with a city- wide vacancy rate of 10 percent. There were no notable deliveries in the sec- ond quarter, but more than 826,000 square feet of multi-tenant retail space is under construction, led by the rede- velopment of the former Joske's Build- ing at RiverCenter Mall downtown. It may not be noticeable from street level but an aerial view shows that the entire 510,810-square-foot space has been gutted and renovations are underway to make room for new re- tailers like H&M;, Dave & Buster's and many more. The remaining projects under con- struction are mostly smaller, unan- chored centers scattered throughout the market in niche locations. Mean- while, Walmart and HEB continue to identify sites for new locations in their never-ending quest for a larger mar- ket share of the grocery dollar. Overall, the outlook for the San Antonio market remains positive, al- though commercial market vacancy rates will fuctuate as new product comes online and progresses in lease- up through the remainder of the year. Employment growth remains the key to the overall success of the re- gion. The San Antonio-New Braunfels MSA saw a gain of 26,600 new jobs over the past twelve months ending June 2015 for an annual growth rate of 2.8 percent, according to Texas Work- force Commission. At the same time, the unemploy- ment rate continued its decline in June, falling to 3.8 percent. This fol- lows the pattern of the state and na- tion, which were 4.4 percent and 5.5 percent, respectively. S N A P S H O T: S A N A N T O N I O Kim Gatley SVP, Director of Research, REOC San Antonio SAN ANTONIO EXPERIENCING GROWTH IN ALL SECTORS • Direct access to I-10, 35 miles to Downtown Houston, 2 miles of frontage. Superb access to Austin, San Antonio, and the Rio Grande Valley. • Proximity to Port of Houston turning basin (44 miles); International Airports (Bush and Hobby, 45 miles); and Houston Executive Airport (2 miles). • All utilities and draining on site, including natural gas 35 kv electrical line. • Access to great labor draw within 30 minutes. Work-force: 266,858 Distribution employment: 8,213 Manufacturing employment: 43,788. • Great corporate neighbors: Rooms-to-Go, Medline, Weatherford, Cameron and Igloo located in the energy corridor. • Potential incentives: property tax abatement, reduction of assessed value, Freeport exemptions, and employee transit benefits. Fulshear Texas Where Opportunity Abounds www.fulsheartexas.gov Contact: CJ Snipes 281.346-8803 cjsnipes@fulsheartexas.gov PointWest 1,015 Acres of Prime Real Estate Designated For Commercial Development