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San Antonio Office Market Finishes 2014 StrongSan Antonio Office Market Finishes 2014 Stronghttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=103102015-03-03T10:54:00Z2015-03-03T00:00:00Z

SAN ANTONIO (REOC San Antonio) – Demand for area office space yielded a third consecutive year of positive net absorption, according to REOC San Antonio's survey of nearly 29 million sf of office lease space. New leases and expansions signed in the fourth quarter generated 42,716 sf of positive net absorption, raising the year-end total to 685,675 sf — the highest level recorded since 2006.

Nearly 250,000 sf of new office lease space was delivered in 2014, and more than 900,000 sf of speculative space moved through the development pipeline. The eight major projects currently under construction and scattered throughout the northwest, far north and far west sectors will increase the city’s office lease space inventory by 3 percent. More than 260,000 sf has reportedly been preleased, accounting for roughly 30 percent of the total amount under construction.

The addition of new supply along with tenant moves offset positive absorption in the fourth quarter. The UT Health Science Center, for example, vacated 45,324 sf at Med Centre Plaza, and UTSA emptied 11,168 sf at 4350 Lockhill Selma — both opting to consolidate into existing owner-occupied space.

As a result, the local office market closed the year with an 18.3 percent vacancy rate, up slightly from 17.8 percent last quarter but improved compared with 19.5 percent recorded in the same quarter last year.

Vacancy within the subset of top-tier Class-A properties remained relatively stable at just under the 10 percent mark, which is better than the 11.1 percent vacancy rate recorded a year ago. While the downtown office market remains challenged with a vacancy rate of 26.9 percent, the Class-A vacancy rate stands at a much healthier 8.1 percent.

The average quoted full-service rental rate for area office space was $20.37 per sf per year on a full-service basis, which is up $0.65 or 3.3 percent from year-end 2013. The citywide average cost for renting Class-A space currently stands at $25.70 — up $0.35 or 1.4 percent compared with a year ago.

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