San Antonio office market strong and stable

​​​SAN ANTONIO – The local office market is showing signs of strength and stability at mid-year.

The office market experienced 181,046 sf of positive net absorption in the second quarter, according to the survey of more than 30
million sf of office lease space conducted by the research department of REOC San
Antonio and confirmed by the Xceligent Office Advisory Board.

Gains in the
second quarter raised the year-to-date total to 425,881 sf. Overall, new leases and
expansions outpaced new supply in the second quarter, which allowed the citywide vacancy
rate to improve to 18.6 percent, compared to 18.9 percent last quarter. That’s up slightly compared
17.5 percent recorded in the same quarter of 2015 due to the addition of nearly 738,000 square feet
of new office space delivered over the past 12 months. 

Among Class A buildings, the citywide vacancy rate improved slightly compared to last
quarter moving from 13.8 percent to 13.3 percent, which is substantially lower than the Class B and C
markets recorded at 21.1 percent and 23.9 percent, respectively. Still, vacancy within the top-tier Class A
submarket is up compared to 9.8 percent recorded last year. 

​Office properties closed the second quarter with a
combined citywide average quoted rental rate of $23.17 per sf. That’s up $0.97 per sf or 4.4 percent compared to a year ago, reflecting higher rental rates quoted for new product. On average, the cost of  renting Class A office space stands at $27.85 while the average rent for Class B space
stands at $21.38. ​

Investment activity slumped in the second quarter. Job growth within the city also slowed in June with a loss of 1,100 jobs reported by the Texas Workforce
Commission, which represents a slight decrease of -0.1 percent for the month. Over the past 12 months, however, the San Antonio-New Braunfels region gained 23,400 new jobs for a
moderate 2.4 percent annual job growth rate.