San Antonio Retail Hits Record-High Rent

SAN ANTONIO-Remember the retail could be the battle cry in San Antonio’s commercial real estate market. Unlike the office and other sectors, retail has posted a record-high average rent and is gearing up for more space on the market.

“Retail is doing real well in this market in general,” Marilynn Glasscock, with Dominion Realty Advisory Group Inc., tells GlobeSt.com. She presented the retail outlook at a recent real estate gathering in San Antonio.

Rents citywide average $11.05 per sf, up 26 cents from 2000. It’s the first time rent topped $11 per sf. The citywide vacancy rate is 15% and absorption has been down this year. “That was mainly because of losing Montgomery Ward’s, Bealls and Weiner’s and some of the big department stores,” she says. “We’ve got some big retailers coming in such as Lowe’s and Costco, but they’re stand-alone and they don’t count against absorption.”

The market has about 30.5 million sf in retail space, having added about one million sf since mid-2000, Glasscock says. Another four million sf is planned or under construction, much of it following housing development.

“You drive around 1604, for example, there’s new construction going on everywhere,” Glasscock says. “The Forum at 1604 and IH-35 is just blowing and going. When it’s finished it will be the largest open-air shopping complex in the state of Texas.” The Forum will build out at 1.2 million sf. The Shops at La Cantera, a Rouse Co. project which is to break ground late this year and open in 2004, will add another 1.3 million sf.

Developers also have been catching up to residential development. “There’s lots of infill, especially in north central submarket because the rooftops kind of got ahead of the retail for a while because of the slump in the early ’90s, late ’80s,” Glasscock says.

Rents should be stable, she says. “They’re not going to slump greatly, but they’re not going to go way up,” she tells GlobeSt.com. “The average rent of the new development is over $20 a foot and. With the economy the way it is, that’s about as much as it’s going to be for a while.