San Antonio Monthly Industrial Market Snapshot · 2018-10-01 · Economy expanding at a steady...

SAN ANTONIO INDUSTRIAL

Monthly Market SnapshotSEPTEMBER 2018

HOUSTON | AUSTIN | SAN ANTONIO

0.0

1.0

2.0

3.0

4.0

5.0

2013 2014 2015 2016 2017 YTD 2018

Milli

ons

(SF)

Deliveries Net Absorption

Supply & Demand

0.0 0.5 1.0 1.5 2.0 2.5

Guadalupe County

North Central

Northwest

Northeast

Comal County

South

Millions (SF)

Total Under Construction 4,168,031 sq. ft.Available Leased

Construction Activity by Submarket

Market HighlightsSan Antonio industrial market continuing steady pace. Nearing the end of the third quarter the vacancy rate was unchanged from this time last month, at 6.2%. Of the 871,000 sq. ft. delivered to the market year-to-date, about 25.0% of that space is unoccupied. Of the 25 properties with 4.1 million sq. ft. currently under construction, 42.4% of that space is available for lease. Year-to-date net absorption totals 78,431 sq. ft., while there have been 240 deals representing 2.7 million sq. ft. of leasing activity. The average asking rate of renting industrial space was up $0.01 from last month at $0.52 per sq. ft. per month.

Investment sales down year-to-date through August. According to Real Capital Analytics, investment sales of industrial properties in the San Antonio area totaled $146.9 million, down -65.3% from one year ago as investors are having a difficult time locating assets to acquire in San Antonio. REIT/listed has been the most active buyer type for 2018, comprising 48.0% of San Antonio's total sales volume, followed by private buyers at 23.0%, cross-border investors at 14.0%, user/other comprising 10%, and institutional investors representing the remaining 5.0%.

Growth in the San Antonio economy remained moderate in July. San Antonio jobs grew at a 0.4% annualized rate over the three months through July. Growth across industries was mixed, with health care employment rising but leisure and hospitality employment falling. Other services and mining grew at a healthy stride, while construction jobs picked up, with a net addition of nearly 900 specialty trade contractor jobs alone. San Antonio’s seasonally adjusted unemployment rate fell to 3.2% in July, well below the 4.0% rate for Texas and the 3.9% rate for the U.S.

Leta WausonDirector of Research

[email protected] 713 275 9618

Market Activity

Year-to-Date 2018

September August

Vacancy 6.2% 6.2%

Availability 10.4% 10.4%

Net Absorption (SF) 78,431 -203,904

Leasing Activity (SF) 2,697,394 2,064,749

Deliveries (SF) 870,917 592,512

Under Construction (SF) 4,168,031 4,375,734

NNN Avg Asking Rent (PSF) $0.52 $0.51


Monthly Market SnapshotAUGUST 2018


4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2013 2014 2015 2016 2017 YTD 2018

Milli

ons

(SF)

Deliveries Net Absorption Vacancy

Supply & Demand

0.0 0.5 1.0 1.5 2.0 2.5

Guadalupe County

Northwest

North Central

Northeast

Comal County

South

Millions (SF)



Market HighlightsVacancy rate rose moderately to 6.2%. Midway through the third quarter, the vacancy rate grew 40 basis points to 6.2%, compared to this time last month at 5.8%. Occupancy of the almost 600,000 sq. ft. delivered to the market year-to-date stands at 59.3%, and of the 24 properties with 4.4 million sq. ft. currently under construction, 46.2% of that space is available for lease. Year-to-date net absorption totals -203,904 sq. ft., as A’Gaci’s bankruptcy reorganization plans move forward, vacating their 283,818 sq. ft. distribution facility in Von Ormy. In addition, there have been 202 deals accounting for 2.0 million sq. ft. of leasing activity. The average annual asking rate of renting industrial space is $6.16 per sq. ft. on a triple net basis.

Investment sales down year-to-date through July. According to Real Capital Analytics, investment sales of industrial properties in the San Antonio area totaled $137.8 million, a -62.3% change from one year ago. REIT/listed has been the most active buyer type for 2018, comprising 55.0% of San Antonio's total sales volume, followed by private buyers at 22.0% and cross-buyers and user/other investors, both representing 11.0% each.

Economic growth remained mild in June. Job growth inched up in San Antonio at a 0.5% annualized rate in the second quarter. Goods-producing industries continued to grow, although mining and manufacturing slowed from very strong growth earlier in the year. Construction jobs accelerated, adding nearly 1,000 jobs, while leisure and hospitality continued to shed jobs. San Antonio’s seasonally adjusted unemployment rate stayed at 3.3% in June, well below the 4.0% rate for both Texas and the U.S.



Market Activity

Year-to-Date 2018

August July

Vacancy 6.2% 5.8%

Availability 10.4% 9.5%

Net Absorption (SF) -203,904 114,055

Leasing Activity (SF) 2,064,749 1,810,027

Deliveries (SF) 592,512 458,647

Under Construction (SF) 4,375,734 3,967,221

NNN Avg Asking Rent (PSF) $6.16 $6.14


Monthly Market SnapshotMAY 2018


Market Activity

YTD 2018

Vacancy 5.7%

Availability 8.4%

Net Absorption (SF) 222,297

Leasing Activity (SF) 1,039,376

Deliveries (SF) 418,615

Under Construction (SF) 3,451,092

Avg Asking NNN Rent (PSF) $6.54

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014 2015 2016 2017 YTD 2018

Milli

ons

(SF)


Supply & Demand

0.0 0.5 1.0 1.5 2.0

Guadalupe County

North Central

Northwest

Northeast

Comal County

South

Millions (SF)



Market HighlightsIndustrial market indicators remain robust in 2018. Over halfway through the second quarter, 418,615 sq. ft. of Warehouse/Flex space has been delivered, year-to-date net absorption is at 222,297 sq. ft., and vacancy is inching downward, registering at 5.7% compared to 6.0% at this time last month. The current amount of space under construction is 3.5 million sq. ft., with only 30% of that space available for lease. In a tight market, leasing activity is at 1 million sq. ft. year-to-date.

Investment sales up 62% year-over-year. Sales of major industrial properties grew 62.0% on a year-over-year basis nearing the end of May 2018, totaling $99.8 million, based on Real Capital Analytics data. The buyer composition was made up of 60% REIT/listed investors; 23% private buyers; and the remaining 17% are cross-border.

Colony Industrial acquires Enterprise Industrial Park. Enterprise Industrial Park, located at 17745 Lookout Road, is a two-building, Class A light industrial complex totaling 639,797 sq. ft. Ecommerce and the growing call for fast delivery are driving strong demand for well-located, infill warehouse space that provides the essential "last-mile" link in the logistics chain.

Growth in the economy picked up in April. The San Antonio unemployment rate decreased to 3.4% in April, as the Texas rate edged up to 4.1%, and the U.S. rate fell to an 18-year low of 3.9%. San Antonio job growth increased at a 0.7% annualized rate over the three months through April, with mining maintaining its position as the fastest-growing industry. In addition, manufacturing was strong, adding 800 jobs over this time, while construction toned-down from last year’s strong pace although increased above its 20-year average of 2.0%.




Monthly Market SnapshotMARCH 2018


Market Activity

YTD 2018

Vacancy 6.0%

Availability 8.5%

Net Absorption (SF) 55,666

Leasing Activity (SF) 555,438


Under Construction (SF) 620,592


4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014 2015 2016 2017 YTD 2018

Milli

ons

(SF)


Supply & Demand

0 50 100 150 200 250 300

Guadalupe County

Comal County

South

Northwest

North Central

Northeast

Thousands (SF)

Total Under Construction 620,592 sq. ft.Available Leased


Market HighlightsIndustrial market indicators remain strong in 2018. Nearing the end of the first quarter, 203,663 sq. ft. of Warehouse/Flex space has been delivered, year-to-date net absorption is at 55,666 sq. ft., and vacancy is down slightly at 6.0% compared to this time last month at 6.1%. The current amount of space under construction is 620,592 sq. ft., with close to 80% of that space available for lease. In a tight market, leasing activity is at 555,438 sq. ft. year-to-date.

Investment sales up 60% year-over-year. Sales of major industrial properties grew 59.7% on a year-over-year basis through February 2018, totaling $17.1 million, based on Real Capital Analytics data. The buyer composition was made up of 100% private investors. The most recent significant year-to-date transaction in the local market took place in February: the acquisition by Steiner LLC of a 107,618-sq.-ft. industrial property, at 3323 E. Commerce St., in northeast San Antonio, from Nshe TX Cascarudo LLC.

Beginning of 1.3 million sq. ft. business park. Building 1, the 179,655-sq.-ft. speculative warehouse, located in Gateway 10 Business Park, is on schedule for completion in June 2018. The project is located on I-10 E. in Northeast San Antonio near Foster Road. The 100+ acre master planned development will ultimately offer retail, commercial and industrial land sites.

Economy expanding at a steady pace. The San Antonio unemployment rate increased slightly to 3.4% in January. The Texas and U.S. rates held steady at 4.0% and 4.1%, respectively. The jobless rate was revised down significantly last year, with a 17-year low of 3.1% last October. Local area jobs increased over the three months through January, with strong growth in goods-producing industries. In addition, mining added jobs at a fast pace and construction hiring picked up due to the demand for specialty trade contractors.




Monthly Market SnapshotFEBRUARY 2018


Market Activity

YTD 2018

Vacancy 6.1%

Availability 8.6%

Net Absorption (SF) -58,503

Leasing Activity (SF) 178,113




4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

-0.8

0.0

0.8

1.6

2.4

3.2

2013 2014 2015 2016 2017 YTD 2018

Milli

ons

(SF)


Supply & Demand

0 100 200 300 400 500 600

GuadalupeCounty

South

Northwest

North Central

Northeast

Thousands (SF)

Total Under Construction 793,027 sq. ft.


Market HighlightsIndustrial market indicators off to a good start in 2018. Midway through the first quarter, 40,500 sq. ft. of Flex/Warehouse space has been delivered, total net absorption is at -58,503 sq. ft., and vacancy at 6.1% year-to-date compared to Q4 2017 at 6.0%. The current amount of space under construction is 793,027 sq. ft., with 72% of that space available for lease. In a tight market, leasing activity is at 178,113 sq. ft. year-to-date.

Rolls-Royce ramping up for Boeing 757s. Port San Antonio’s StandardAero will be expanding its local workload significantly. The company recently announced an agreement with Rolls-Royce to provide services for engines that power the Boeing 757 aircraft. The company’s site at the Port covers over 500,000 sq. ft. of highly specialized industrial facilities. The expansion underscores San Antonio’s economic strength and growth in the years ahead.

Investment sales up 56% year-over-year. Sales of major industrial properties grew 56.8% on a year-over-year basis through fourth quarter 2017, totaling $450 million, based on Real Capital Analytics data. The buyer composition is made up of 37% private, 35% cross-border, 11% public listed/REITs, 9% user/other, and 7% institutional.

Labor force grew the fastest of the state’s major metros. The San Antonio economy grew at a robust pace in December. Jobs surged, and the area unemployment rate dropped slightly to 3.8% after rising to a revised 3.9% in November. The state rate picked up marginally to 3.9%, while the U.S. rate held steady at 4.1%. The San Antonio labor force grew at a strong 3.4% last year, well above Texas’ 1.4% stride and the fastest of any of the state’s major metros.




Monthly Market SnapshotNOVEMBER 2017


Market Activity

YTD 2017

Vacancy 5.9%

Availability 8.6%

Net Absorption (SF) 1,023,950


Deliveries (SF) 1,463,724



Under Construction (SF) 1,022,356


Supply & Demand

Under Construction

Market HighlightsConstruction pipeline yields plenty of available space. During 2017, 1.46 million sq. ft. has been delivered to the market, with 68% of that new supply available for lease. Overall net absorption is at 1.02 million sq. ft., nudging vacancy up 20 basis points to 5.9% year-to-date compared to Q3 2017 at 5.7%. The current amount of space under construction is 869,207 sq. ft., with 24% of that space pre-leased. In a tight market, leasing activity is at close to 3.8 million sq. ft. year-to-date.

Major technology company purchases data center. Microsoft Corporation acquired an $80-million data center in far west San Antonio, as part of an ongoing effort to amass data centers in the metro area. The 202,000-sq.-ft. property sits on 34 acres at 5200 Rogers Rd. in Westover Hills. Chevron Corp. had previously owned the flex/data center since 2011.

Investment sales up 66% year-over-year. Sales of major industrial properties grew 66.1% on a year-over-year basis mid-way through the fourth quarter, totaling $423 million, based on Real Capital Analytics data. The buyer composition is made up of 37% cross-border, 36% private, 12% REIT/listed, 8% institutional and 7% user/other. The most recent significant year-to-date transaction in the local market took place in August: the acquisition by Stonemont Financial of an eight-building, 184,589-sq.-ft. industrial/flex property, Weatherford - Eagle Ford Headquarters, at 19685 I-37 S., in south San Antonio, from Oak Street RE Capital.

Economy grows at a strong pace in September. The San Antonio economy continued to grow at a robust pace in September, as jobs grew moderately and the area unemployment rate declined to 3.9%, slightly below the state rate of 4.0 and the national rate of 4.2%. Unlike state and national job growth, which declined due to the impacts of the recent hurricanes, San Antonio saw a healthy 3.5% annualized increase in employment.




Monthly Market SnapshotMAY 2017


Market Activity

YTD

May 15, 2017

Vacancy 6.5%

Available 9.2%

Net Absorption (SF) -93,304





-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2012 2013 2014 2015 2016 YTD 2017

Milli

ons

(SF)

Total Net Absorption Deliveries

Supply & Demand

0%

3%

6%

8%

11%

YTD 2017 2016 2015 2014 2013 2012

Vacant Space Available Space

Availability

Market Highlights

The San Antonio industrial market continued its strong performance, with a current citywide vacancy rate of 6.5%.

Year-to-date, San Antonio’s industrial market leasing volume has posted 109 deals totaling more than 1.1 million sq. ft., with the average deal size 9,800 sq. ft.

Close to 555,000 sq. ft. has come online in 2017, with 20% preleased.

The construction pipeline is at 800,000 sq. ft., all scheduled to deliver in 2017, with 30% preleased.

A large project currently underway is Building 3 of Cornerstone Industrial Park located in the Northeast submarket at the intersection of IH-10 East and Loop 410 South. The distribution building is 144,137 sq. ft. and scheduled to deliver in June 2017. Upon completion, the industrial park will contain up to a total of 25 buildings containing more than 4 million sq. ft.

The San Antonio Business Journal recently announced the finalists in the development and transaction categories of this year's Best in Commercial Real Estate Awards. In the industrial transaction category, Coastal Life Technologies and Conn’s were both selected. The winners will be named during an awards presentation in June.



Market Highlights

An increase in overall rental rates in the industrial market indicate that tenants are agreeing to pay extra for more useful new construction space, even with vacancy rates on the rise.

Construction continues on the I-35 Logistics Center in New Braunfels. The 397,600-sf.-ft. Class A warehouse is expected to deliver March 2017. The warehouse is being built on a 30-acre site, a 20-minute drive from the San Antonio International Airport.

Key Economic Indicators

The San Antonio economy continued to grow at a strong pace in December in part due to the labor force expanding at a robust 3.1% annualized growth rate, well above the average for the year.

In 2016, San Antonio employment expanded at a modest pace across nearly all major sectors.


Monthly Market SnapshotMARCH 2017


Market Activity

QTD Feb-17

Prior Quarter Q4 2016

Year Ago Quarter Q1 2016

Net Absorption -168,836 486,139 621,254

Vacancy Rate 6.5% 6.3% 6.2%

NNN Avg Asking Rent $5.75 $5.66 $5.40

Deliveries 15,618 463,283 825,910

Under Construction 914,616 830,534 1,998,705

Supply & Demand12.0

13.6

15.2

16.8

18.4

20.0

-2.5

-1.4

-0.3

0.8

1.9

3.0

1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 QTDFEB-17

Millions

Supply andDemand

TotalNetAbsorptionSF TotalVacancy%

12.0

13.6

15.2

16.8

18.4

20.0

-2.5

-1.4

-0.3

0.8

1.9

3.0

1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 QTDFEB-17

Millions

Supply andDemand

TotalNetAbsorptionSF TotalVacancy%

5.0

6.2

7.4

8.6

9.8

11.0

-0.6

0.0

0.6

1.2

1.8

2.4

Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 QTD FEB-17

Milli

ons

YTD Lease Transactions by Submarket14

13

7

3 32

1

Northeast North Central Northwest Atascosa County

Comal County Guadalupe County

CBD

San Antonio Monthly Industrial Market Snapshot · 2018-10-01 · Economy expanding at a steady...

Documents

Transcript of San Antonio Monthly Industrial Market Snapshot · 2018-10-01 · Economy expanding at a steady...