San Antonio is a Tale of Two Cities

As employees adjust to a post-pandemic lifestyle, leasing decisions remain on hold for many companies until the workplace returns to a sense of normalcy, according to CBRE Research’s second quarter San Antonio MarketViews. As a result, the San Antonio office market remained relatively quiet in the second quarter with 15,876 square feet of market-wide negative net absorption at close of the quarter.

Nearly 169,000 square feet of class-A office space delivered in second quarter 2021 and more than 1 million square feet remains underway.

Class-A rents in the CBD continued to show strong growth with NNN rents standing at $36.69 per square foot at the end of the quarter. The North Central/Midtown corridor along Broadway is seeing substantial rent growth with new construction rents ranging from $28.00 to $38.00 NNN.

However in a tale of two cities, the San Antonio industrial market showed no signs of slowing down, with more than 1.1 million square feet of positive net absorption in second quarter. Heavy leasing activity caused vacancy to decrease 130 basis points quarter-over-quarter, from 13.8 percent in first quarter 2021 to 12.5 percent in second quarter 2021.

Construction completions slowed down, with only one building totaling 73,161 square feet delivering in second quarter 2021. On the other hand, construction starts ramped up with more than 423,000 square feet of speculative space added to the pipeline at the close of the quarter. Of the 18 projects underway, 70.7 percent are already pre-leased.