San Antonio Industrial On the Mend
- Apr 06, 2015
The industrial market in San Antonio saw a continuous upward path during the final quarter of 2014, marking the 15th consecutive quarter of positive net absorption, according to recent reports provided by CBRE. Q4 2014 ended with a 7.7 percent industrial vacancy rate; an increased asking rate of $7.23 per square foot; a positive net absorption of 117,187 square feet; and 652,723 square feet of under construction industrial space.
In Q4 2014, the San Antonio industrial market saw the average asking rate rise to near record levels of 2008. The positive net absorption of the 117,187 square feet registered in Q4 2014 pushed the year’s total net absorption up to 701,780 square feet. Vacancy increased due to newly delivered projects delivered on the market; an 80 basis points quarter-over-quarter rise led to a 7.7 percent increase, marking the sixth consecutive quarter with rates south of 10 percent. New completions added over 370,000 square feet of industrial space to the market, almost one third the level registered in 2013. Nearly 200,000 square feet of new product was not preleased prior to delivery.
Warehouse product is responsible for the vast majority of positive net absorption by posting 100,764 square feet and surpassing flex product that saw a very modest 16,423 square feet of positive net absorption . Warehouse space registered the 11th consecutive quarter of positive net absorption, while flex marked the 6th straight quarter. Warehouse vacancy ended the year at 6.3 percent, while flex vacancy rose to 13.5 percent.
For the first time since 2010, citywide average asking rates rose above $7.00 per square foot, at $7.23. Flex rates reached levels of over $10.00 per square foot, while warehouse rates closed the quarter at $5.18 per square foot.
Following a year that saw over 1.2 million square feet of new industrial space delivered to the market, 2014 saw just under a third of that—slightly more than 370,000 square feet. Half of the new space delivered to the market in Q4 2014 was preleased, according to CBRE data. For instance Enterprise 1, a warehouse building that encompasses 315,000 square feet, was already pre-leased to Keystone and Goodman upon completion, while Buildings 3 and 4 of the Tri-County Business Park came online with 16,000 square feet of space pre-leased to Verizon. According to CBRE, 2014 ended with only 12 percent of industrial product under construction preleased out of the 652,723 square feet.
Charts courtesy of CBRE