San Antonio Retail Market Primed for More Growth

Almost 718,000 sf was absorbed in the fourth quarter, which offset losses from earlier in the year and gave San Antonio a positive absorption of about 439,000 sf for 2002, according to the fourth quarter retail market report from REOC Partners.

Albertsons, the Boise, ID-based grocery company, closed 23 San Antonio stories and Kmart has closed or will close its San Antonio locations. That followed the vacancies left by Montgomery Ward's and Service Merchandise in 2001. About 3.9 million sf of vacant big-box space is on the market. Last week, Dallas-based Archon Group bought 10 of the former Albertsons and plans to market them for retail as well as office use. It's still negotiating to buy five more.

The overall occupancy rate for the 32.7-million-sf inventory in the fourth quarter was 87%, up from 85% at midyear. Occupancy stood at 86.2% at the end of 2001, when inventory exceeded 31.9 million sf. Developers added 831,000 sf of retail space during the past year. The average rental rate citywide rose to $13.71 per sf from $13.35 per sf.

Power centers soaked up more than 253,000 sf in the fourth quarter and reached 94% occupancy, the highest rate among retail center classes. Part of the gain came from the completion of the Vineyard's first phase. Tenants in the 320,000-sf center at Loop 1604 and Blanco Road include Super Target, James Avery and Payless Shoes.

Regional malls also had a strong showing with about 291,000 sf of positive absorption in the fourth quarter. Their occupancy rate took a good-sized jump to 85.1% from 78.9% in 2001.

Neighborhood centers absorbed about 198,000 sf, raising the category's occupancy to 85.9% at the end of the fourth quarter from 84.5% in the middle of 2002. In the south submarket, the 64,000-sf Rigsby Road Center opened with tenants in place and the Southwest Junction center added 18,000 sf.

Geographically, the CBD has the lowest vacancy rate at 8.8%, followed by the northwest submarket with 10.2% and the north central submarket with 10.8%.

Expect more retail for San Antonio this year with 1.5 million sf in different stages of development, according to REOC. Wal-Mart, Target and Kohl's have a combined seven stores either under construction or in planning. San Antonio-based H-E-B is moving toward larger stores and closing smaller ones in the process.