Wednesday, March 05, 2014
San Antonio Industrial Market
SAN ANTONIO (REOC San Antonio) – The city's industrial market closed out 2013 with a citywide vacancy rate of 6.8 percent, according to REOC San Antonio's fourth quarter survey of more than 33.5 million sf of area industrial lease space.
That marks the lowest on record and down from 7.3 percent last quarter and 9.9 percent recorded in the same quarter last year.
Fourth quarter tenant move-ins generated nearly 1.3 million sf of positive net absorption led by the delivery of the Amazon.com Fulfillment Center in the northeast sector. That pushed the year-end total absorption to nearly 2.5 million sf — another record set and besting the 1.5 million sf recorded in 2007.
The remainder of the market had only 39,611 sf of positive net absorption, a slowdown from earlier quarters.
Developers broke ground in the fourth quarter on two new projects, both in the northeast sector: Enterprise Industrial Park, spanning 315,362 sf; and Tri-County 3 and 4, a two-building complex totaling 63,360 sf.
The citywide average cost of renting industrial space rose $0.04 over the quarter to $7.58 per sf on a triple net basis, up $0.52 or 7.4 percent from the same quarter last year, according to Xceligent data.
The cost of renting distribution warehouse space climbed $0.08 over the quarter to a citywide average of $5.28, up $0.38 or 7.8 percent compared with last year at this time. The city’s inventory of more than 25.6 million sf of distribution warehouse space closed the year with a citywide vacancy rate of 5.2 percent — down from 5.5 percent last quarter and 7.5 percent in the same quarter of last year.
The service center/flex market closed the year with a citywide vacancy rate of 12.1 percent, an improvement over last quarter's 13 percent and the 18.3 percent recorded in the same quarter last year. The average quoted triple net rental rate was $9.26 per sf annually.
Looking ahead, “tenants may be challenged with higher lease costs as the market continues to tighten; the addition of new projects will create some options for expansion and tenant relocation but the market is in need of more than what is currently under construction,” said REOC San Antonio Senior Vice President John Greg Turcotte. “In the meantime, businesses looking for large blocks of space will be forced to consider building their own facilities.”