office market

For the third consecutive year, the San Antonio office market has posted positive net absorption, with 685,675 square feet through the year (the highest since 2006). While positive net absorption was strong, vacancy rates did rise somewhat, moving from 17.8% in the third quarter of 2014 to 18.3%. This rise was caused by new offices coming online as well as some shifts by large tenants – the UT Health Science Center vacated a 45,324 square foot space which was in coworking space business area and UTSA vacated 11,168 square feet, as both worked to move operations to space they already owned.

There was quite a bit of activity in the construction side of the San Antonio office market, with 250,000 square feet launched in 2014 and over 900,000 square feet currently in differing stages of development. Reports are that nearly 260,000 square feet of that has already been preleased (nearly 30% of current construction), so 2015 should provide some good movement in the absorption rates as well.

image courtesy of amboo who?

Although the San Antonio office market struggled through a good portion of 2013, it was able to end the year with some positive news. During the first half of 2013, the San Antonio office market had about 300,000 square feet of positive net absorption, but that pace slowed into the second half. The slowdown was caused by job losses in industries connected with office markets. In the fourth quarter however, new leases and expansions by existing offices created 34,509 square feet of positive net absorption for a total gain of 325,994 square feet through 2013. New office space developments helped bring the net absorption rates lower with almost 287,000 new square feet of office space entering the market through the year. This in turn pushed the vacancy rate up from 18.8% to 19.5%. Class-A office space rents dipped $0.10 per square foot to $23.25, while the average full-service rental rate rose by $0.13 to $19.72.

image courtesy of John Tedesco