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Market Information: San Antonio

 

Economy
Office
Flex/High Tech

 

Economy:  Year-End 2008

Economy: Continued Easing

San Antonio's economy is still healthy but continues to ease from the most recent peak. In June, AT&T, a major employer in the city, announced that it was relocating its headquarters and 700 executive employees. The telecom giant will maintain a major operational presence in San Antonio with about 5,300 employees. Job growth for the 12 months ending October 2008 totaled 17,900, a growth rate of 2.1%, compared to the national rate of -0.9%. This is above the long-term average annual growth of 17,000 net new jobs.

The Government, Educational/Health Services, and Trade and Transportation sectors comprise 50% of the employment in Greater San Antonio. These sectors experienced strong growth over the past year, adding a combined 10,900 jobs in the 12-month period ending in October 2008, 61% of total job growth.

The San Antonio Metro Area unemployment rate increased to 5.1% in October 2008, from 3.8% 12 months earlier. By comparison, the national rate was 6.5% in October 2008. The unemployment rate in Greater San Antonio remains among the lowest in the nation. 

 

Office Market:  Year-End 2008

Market Overview: Moderating Expansion

Highlights:

  • Net absorption of office space totaled 606,000 SF in Greater San Antonio in 2008, down from 885,000 SF in 2007. 
  • Available office sublease space in Greater San Antonio increased by 12,000 SF in 2008 to 177,000 SF. In 2007, sublease space increased by 70,000 SF.  Available sublet space represents 0.4% of standing inventory.
  • The overall vacancy rate in Greater San Antonio was 11.4% at year-end 2008, up from 11.0% at year-end 2007. The direct office vacancy rate is 11.0%, up 50 basis points from 10.5% at year-end 2007. The sublease vacancy rate is 0.4%, down 10 basis points from year-end 2007.
  • There is 3.3 million SF of office space under construction or renovation in Greater San Antonio at year-end 2008, at 67% pre-leased.  A year ago, 1.5 million SF was under construction, at 33% pre-leased. 
  • Of the 883,000 SF of office space delivered in 2008 (excluding renovations), 31% was leased upon delivery. This compares to 997,300 SF in 2007, at 39% pre-leased.
  • Positive market forces are pushing asking rents up slightly for all property classes. Class A rents increased 0.4% in Greater San Antonio in 2008.
  • Investment sales activity in Greater San Antonio has slowed in 2008, as in all major markets. Sales volume totaled $246 million in 2008, below the $396 million recorded in 2007.
  • Office sale prices averaged $140/SF in Greater San Antonio in 2008, up from $110/SF in 2007.

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Flex/High Tech Market:  Year-End 2008

Market Conditions Improve in 2008

Highlights:

  • A strong 2nd half of 2008 in Greater San Antonio's flex/high-tech market helped offset negative net absorption in the 1st half of the year. Net absorption was 127,000 SF in 2008, slightly higher than the 124,000 SF in 2007.
  • Available flex/high-tech sublease space decreased by 2,000 SF in Greater San Antonio in 2008, after increasing by 8,000 SF in 2007. Available sublease space now represents 0.2% of the flex/high-tech standing inventory. 
  • The overall flex/high-tech vacancy rate decreased to 8.9% at year-end 2008 from 9.6% at year-end 2007. The direct vacancy rate at year-end 2008 is 8.7%, down from 9.4% at year-end 2007.
  • There are four flex/high-tech building under construction or renovation at year-end 2008, totaling 517,000 SF at 8.1% pre-leased. 
  • One flex/high-tech building with 43,200 SF delivered in the 2nd half of 2008 at 0% pre-leased. For the year, 76,950 SF delivered at 32% pre-leased. No buildings delivered in 2007.  
  • Flex/high-tech rents remained unchanged at year-end 2008, as demand has been modest for this specific product type.
  • Sales volume of flex/high-tech buildings totaled $15 million in 2008, compared to $200 million in 2007. Flex/high-tech sale prices averaged $53/SF in 2008, down from $60/SF in 2007.


To view and/or download the most recent snapshot report in an Adobe Acrobat file, click here.

To view and/or download a full sample report in an Adobe Acrobat file, click here.

 

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