Demand for San Antonio industrial prompts new construction

​​SAN ANTONIO – Tenant demand for area industrial space led to a positive third-quarter performance, according to REOC San Antonio’s survey of nearly 35 million s​f of industrial lease space.

New leases and expansions between the beginning of July and the end of September generated 169,233 sf of positive net absorption, raising the year-to-date total net gain to 760,243 sf.

The industrial market currently has a citywide vacancy rate of 8.9 percent, up slightly compared with 8.4 percent last quarter and 6.1 percent recorded in the same quarter last year. Over that time, more than 484,000 sf of new industrial product has been added to the market.

REOC San Antonio says new product has been "well received" with roughly 75 percent already filled.

"Developers are pushing more than a million sf of industrial lease space through the development pipeline,” says John Greg Turcotte, senior vice president/partner with the firm. Build-to-suit projects, such as the 305,000-sf facility for Conn’s that broke ground this quarter at the Cornerstone Industrial Park, contribute to a preleasing rate of nearly 30 percent for those projects currently under construction.

The average cost for all types of industrial space combined remained stable over the quarter at $7.74 per sf on a triple net basis. That’s down two cents from last year at this time.

While the average quoted rent for service center/flex space climbed $0.25 compared with the same quarter last year to reach $9.60 per sf, distribution warehouse properties saw the quoted average step back $0.31 over the same period to close the quarter at $5.43.