Market Information: San Antonio

Economy

Office

Flex/High Tech

Economy: Year-End 2007

Economy: Strong But Moderating Growth

San Antonio's economy is still healthy, but is starting to show signs of easing from the most recent peak. Job growth for the 12 months ending November 2007 totaled 15,500, a growth rate of 1.9%, compared to the national rate of 1.1%. This is below the long-term average annual growth of 17,000 net new jobs.

The Government, Educational/Health Services, and Professional/Business Services, Trade and Transportation and Tourism and Hospitality sectors comprise three-quarters of the employment in Greater San Antonio. The Government, Educational/Health Services, and Professional/Business Services sectors experienced strong growth over the past year, adding a combined 8,300 jobs in the 12-month period ending in November 2007, 54% of total job growth.

The San Antonio Metro Area unemployment rate declined to 3.6% in October 2007, from 4.2% 12 months earlier. By comparison, the national rate was 4.8% in October The unemployment rate in Greater San Antonio remains among the lowest in the nation, and the area is one of the fastest-growing in the state.

Office Market: Year-End 2007

Market Overview: Moderating Expansion

Highlights:

Net absorption of office space totaled 885,000 SF in Greater San Antonio in 2007, up from 481,000 SF in 2006.

Available office sublease space in Greater San Antonio increased by 70,000 SF in 2007 to 165,000 SF. Available sublet space represents 0.5% of standing inventory.
The overall vacancy rate in Greater San Antonio was 11.0% at year-end 2007, up from 10.8% at the end of 2006. The direct office vacancy rate is 10.5% in Greater San Antonio at year-end. The sublease vacancy rate was 0.5% at year-end 2007, up from 0.2% at year-end 2006.
There is 1.5 million SF of office space under construction or renovation in Greater San Antonio at year-end 2007.
Of the 1.2 million SF of office space delivered in 2007, excluding renovations, 49% was leased upon delivery.
Positive market forces, including delivery of new space, are pushing asking rents up for all property classes. Class A rents increased at a rate of 2.0% in Greater San Antonio in 2007.
Investment sales activity in Greater San Antonio continued its strong performance in 2007. Sales volume totaled $396 million in 2007, compared to $322 million in 2006.
Office sale prices averaged $110/SF in Greater San Antonio in 2007, on par with $111/SF in 2006.

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Flex/High Tech Market: Year-End 2007

Market Conditions: Improvement

Highlights:

The flex/high-tech market saw improvement in Greater San Antonio during 2007, with 124,000 SF of net absorption, compared to a negative 8,000 SF in 2006.
Available flex/high-tech sublease space increased by 8,000 SF in Greater San Antonio in 2007, after declining 8,600 SF in 2006. Available sublease space now represents 0.2% of the flex/high-tech standing inventory.
The overall flex/high-tech vacancy rate declined to 9.6% at year-end 2007, from 11.1% in 2006. The direct vacancy rate at year-end 2007 is 9.4%, compared to 10.9% in 2006.
There are three flex/high-tech building under construction or renovation in 2007, totaling approximately 394,000 SF. They are 80.5% pre-leased.
No flex/high-tech buildings delivered in 2007. In 2006, 90,462 SF delivered at 33% leased upon delivery.
Flex/high-tech rents increased 1.3% in 2007.
Sales volume of flex/high-tech buildings totaled $200 million in 2007, compared to $41 million in 2006. Flex/high-tech sale prices averaged $60/SF in 2007, down from $70/SF in 2006.

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

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