SAN ANTONIO-The industrial market is getting close to the bottom and should begin a turn-around, according to a report from Grubb & Ellis Co.’s San Antonio office. That means many building owners could get through the economic downturn without suffering too greatly on lower rents.

“The trends are getting close to the bottom,” says Shawn Martin, research analyst for Grubb & Ellis in San Antonio. Citywide vacancy was 17.1%, down from 18.1% at the end of the first quarter. Rents for warehouse distribution space increased 11 cents per sf per year to $3.46 per sf while flex space rents dropped 11 cents per sf per year to $8.97 per sf. Few building owners offered concessions.

The rents held firm even as the city’s industrial strongholds of the northeast and north-central submarkets were “hemorrhaging” tenants in the second quarter, according to the Grubb & Ellis report. Negative absorption was 94,641 sf in the quarter and almost 43,000 sf in the northeast submarket. The northeast submarket, the city’s largest industrial area with 24 million sf, had a 13.1% second-quarter vacancy and the north central had an 8.8% rate.

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