The newest accounting has the northeast sector leading all submarkets. In the northwest corridor, flex space is the big driver, with 300,000 sf being absorbed last year. Rental rates have hit new highs in Alamo City, with new buildings commanding rates above $12 per sf annually triple net.

The northeast bulk industrial market, says the report, continues to be the "backbone for the entire San Antonio industrial market." Vacancy rate, however, has spiked to 17%, up from 1999's 12%. According to analysts, some tenants have downsized while others have opted to buy instead of rent.

San Antonio presently has about 500,000 sf of new space under construction. Absorption is predicted to slow somewhat below the 473,410 recorded last year, but leasing most definitely should remain hardy, concludes the report.

In the office sector, absorption had totaled 485,000 sf at year's end, delivering an 11.6% vacancy. It represents nearly a 3% decline from the prior year. The tightest market is class-A space, which is now 8.4% instead of 1999's year-end 12.9%.

"Fewer speculative construction projects should push the class-A vacancy rate even lower" this year, according to analysts. The end result will be higher rents, which have been flat for nearly 18 months.

Eighty-five percent of the absorption has occurred in the suburbs. A 90% occupancy had been reached by the fourth quarter in properties that had been built since 1999.

Instant Insights /

Grubb & Ellis Predicts Solid Growth This Year for San Antonio

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