San Antonio’s retail sector hits 2013 speed bump

SAN ANTONIO – The state of the local retail real estate sector at the end of first quarter 2013 can be summed up in one simple phrase: It’s in the doldrums.

The retail market ended the quarter in the red — posting negative space absorption (net space returned to the market) of 4,818 sf, according to the latest analysis by NAI REOC San Antonio.

That’s quite a change from the more than 86,000 sf of space this sector absorbed as of 1Q 2012.

“Leasing activity is off to a slow start this year,” observes Kim Gatley, vice president and director of research for NAI REOC.

Gatley adds, however, that the retail market is typically slow at the start of the year. The market may have been in the black at the end of first quarter 2012, but 86,000 sf does not equate to a lot of retail activity.

The big push for retailers to open their doors and for consumers to spend money takes place during the holiday season at the end of the year. Come the new year, the retail market slows down.

First quarter 2013 followed the same trend. Now add to that typical 1Q slow down the lack of confidence among consumers.

While most speculative projects remain shelved, larger players like H-E-B and Walmart are still turning dirt on new stores. These projects, in turn, will spur additional development — as other retailers flock to be near these grocery store anchors, and to benefit from the consumer traffic they generate.

Given the lack of new development in the market overall, though, some retailers looking to plant or expand their brands in San Antonio will likely seek out second-generation spaces that are still available in shopping centers. Retailers “are still being very selective,” Gatley says. Tenants want to be in the top-tier centers in the strongest retail submarkets.

La Plaza del Norte, for example, is located in a prime retail hub on the city’s North Central Side. That hub is anchored by North Star Mall, which is located along Loop 410 and across from La Plaza del Norte.

“Lack of new product will continue to funnel new and expanding retailers and restaurants into existing product,” says Brian Harris, senior vice president and partner at NAI REOC. That activity, he adds, will lead to improved occupancy rates as the year progresses.

Read more at the San Antonio Business Journal.