Source: NAI REOC San Antonio
San Antonio’s retail market – despite its status as one of the country’s least-troubled economies – remains sluggish due to the severe slump that has deflated consumer confidence and, more importantly, clipped consumer spending. Still, area population growth and a recovering housing market continue to support growth, albeit at a much slower pace.
According to the latest survey conducted by the research department of NAI REOC San Antonio, local retail centers recorded 262,115 square feet of positive net absorption in the fourth quarter led by the completion of the Alamo Drafthouse phase of development at Park North. In all, the retail market experienced a net gain of 576,964 square feet for the year.
Outpacing demand, new construction delivered nearly 1.1 million square feet of new retail space in 2009. As a result, the citywide vacancy rate climbed to 13.7% compared to 12.9% recorded at the end of 2008. In response, asking rental rates began sliding backwards after posting steady gains over the past decade. At the same time, concessions have been on the rise as owners work to retain traffic-generating retailers. At the close of the fourth quarter, the citywide average quoted triple net rental rate retracted six cents from last quarter to settle at $17.85 per square foot annually, down twenty-six cents or 1.4% compared to the same quarter last year.
Big-boxed anchored Power Centers experienced the lion’s share of activity in 2009 which helped improve the vacancy rate in that category to 7.9% compared to 9.5% a year ago but the impact of the languishing economy was reflected in a drop of asking rents – down $1.53 to $23.83 for an annual decline of 6%. All other categories continue to struggle with double-digit vacancy.
Looking ahead, speculative development currently under construction will likely deliver less than half the amount completed in 2009 led by a second Alamo Drafthouse at the Village of Stone Oak. The slowly improving economy will help but the market is expected to remain flat for much of 2010.
