San Antonio Retail Market’s ‘Positive but Quiet’ Fourth Quarter

SAN ANTONIO (REOC San Antonio) – "Positive but rather quiet" is how REOC San Antonio describes the local retail market in the firm’s fourth quarter 2014 market report.

"Aside from the major push by Walmart, market activity seems to be rather flat, but there is a general consensus among industry insiders that the retail industry is not dead — it’s evolving," said Senior Vice President and Director of Research Kim Gatley. "Forecasts call for more change in the next five years than the industry has seen in the previous 100 years. The mantra seems to be ‘evolve or get left behind’."

Area retail properties had 52,317 sf of positive net absorption in the fourth quarter, raising the year-end total to 566,917 sf.

The market finished the year with a 9.4 percent citywide vacancy rate, stable compared with the previous quarter and improved compared with the 10.3 percent recorded in the same quarter a year ago. The citywide average quoted triple net rental rate stepped back $0.05 from last quarter to $16.60 per sf per year, which is where it stood last year at this time.

Retail development is nowhere near prerecession levels, according to REOC San Antonio. The majority of construction activity has been food-centered — grocery stores and restaurants. More than 311,000 sf of retail lease space was delivered to the market last year in addition to three new H-E-B grocery stores, two Sam’s Clubs, four Walmart Supercenters and three Walmart Neighborhood Centers.

About 361,000 sf of retail lease space is currently under construction, led by The Rim, where nearly 260,000 sf will be added in the first quarter as the final buildings in the Phase 5 expansion reach completion.