Q4 San Antonio Industrial: Continued Favorable Tailwinds

Year-end reports issued by CBRE and NAI Partners for San Antonio’s industrial market pointed to high volumes of absorption, while vacancy was slightly impacted by the delivery of new space.

In his commentary, Carlos Marquez with NAI Partners pointed to the region’s healthy absorption, demonstrating “how leasing activity is keeping up with the added supply.” While the 4.8 million of new space added to the market did lead to a “slight bump in the vacancy rate,” he indicated that the increase would be only temporary.

The CBRE analysts also noted that overall vacancy did bump up, however, “Class A vacancy fell by 100 bps quarter over quarter.” Furthermore, of the 2.5 million square feet under construction, “537,000 square feet is pre-leased,” CBRE researchers commented, adding that, as asking rates for flex/R&D dropped, the warehouse/distribution product demand remained robust.

As for the regional outlook, Marquez indicated that San Antonio would be “one of the more active industrial markets going into 2020,” thanks to the growth of e-commerce demand in South and Central Texas, and ratification of the United States-Mexico-Canada Agreement. Given the latter, San Antonio is uniquely positioned along Interstate 35 “and in the middle of the major North American Automotive hubs,” Marquez said, putting it in a prime location for even more growth.