New projects impact San Antonio office market

​​SAN ANTONIO – New leases and expansions in the city’s office market translated into 201,875 sf of positive net absorption for the third quarter, reports REOC San Antonio in its latest market survey.

Leasing activity was led by Accenture, which backfilled 45,137 sf of the 84,150-sf building at 10931 Laureate. As a result, the Northwest sector had the greatest amount of absorption for both the quarter and the year.

Three new office buildings totaling more than 263,000 sf offset the positive gains. These included two in the Far North sector: Heritage Oaks at Inwood III (109,000 sf) and RidgeWood Business Center II (54,217 sf). The third was in the Far West sector: the One51 Office Centre (100,000 sf).

Because of new supply outpacing demand, the citywide vacancy rate increased from 17.5 percent last quarter to 18 percent at the close of the third quarter.

With the majority of new product added to the Class-A subset, the vacancy rate for those properties climbed to 12.4 percent compared with 9.7 percent a year ago. However, REOC San Antonio expects this trend to be short-lived based on recent area job growth.

The citywide average quoted rental rate for all classes increased by $0.21 this quarter to $20.71 per sf per year on a full-services basis, marking a significant annual increase of 5.8 percent.

REOC San Antonio said the market continues to face the challenge of generating enough demand to keep pace with more than 477,000 sf of office space currently under construction. Of the seven major multitenant buildings scheduled to come online over the next six months, roughly 23 percent of the space is preleased.