Retail real estate hits record-high rental rate in San Antonio
Companies rushing to get stores open in time for
the holidays helped give San Antonio a solid retail
real estate performance in the third quarter, despite
a higher vacancy rate and a slowdown in construction.
Local retail reached a record-high citywide average
rental rate of $15.98 per square foot, according to
a survey by REOC Partners.
Roughly 276,000 square feet of new construction was
added in the third quarter, including Old Navy and
Best Buy at The Rim shopping center in Northwest San
Antonio and another Best Buy at The Legacy shopping
center at U.S. Highway 281 and Loop 1604.
For the quarter, the city's retail vacancy rate was
11.1 percent, higher than last quarter's 10.3 percent.
The higher rate was spurred by North Star Mall's Macy's
moving out of its 178,000-square-foot space into a
larger Foley's spot. Foley's closed when Federated
Department Stores shut down regional chains as part
of its merger with May Department stores.
Compared with last year's record-setting pace, which
included the opening of the Shops at La Cantera, development
in San Antonio has slowed. Through the first nine
months of this year, more than 657,000 square feet
of retail space has been completed, far less than
the 1.8 million square feet in the same period last
year, said Kim Gatley, REOC's director of research.
Power centers were in high demand for the quarter.
Retailers were willing to pay an average of $23.16
a square foot compared with $22.90 a year ago to locate
at power centers, or projects of more than 250,000
square feet. This category has the highest rental
rates in the city.
The pace of absorption, the net gain or loss in leasing
activity, has also slowed -- with only 384,419 square
feet of net absorption through the end of September,
compared with 1.3 million square feet absorbed through
the same period last year.
"A slower pace may result in a longer lease-up
process, but given the supporting growth factors of
population, employment, housing and strong consumer
spending, the outlook for the retail market remains
bright and a strong fourth quarter is anticipated,"
Gatley said.
Power centers have the lowest vacancy rate in the
city at 4.1 percent, compared with regional malls'
vacancy rate of almost 10 percent and neighborhood
centers at 15 percent. Strip centers had a vacancy
rate of 13.7 percent, down from 18.5 percent.
Ward Kampf, president of retail leasing for Thomas
Enterprises, said several stores at The Rim in northwest
San Antonio are experiencing exceptional sales numbers
and Bass Pro had a record-setting grand opening.
"We are very pleased with San Antonio,"
Kampf said. "We are putting together a mixed-use,
high-quality project and we feel it's going to be
great long term for that corridor," he said,
adding that a Justice retailer and a Santikos movie
theater will open at The Rim in the fourth quarter.
