Space in San Antonio’s industrial real estate market is becoming more scarce and pushing prices upward – but that isn’t necessarily a bad omen, according to a local industry expert.
The current vacancy rate of 3.7% is already a record low for the city, a number that might tighten to 3% by the end of the year.
“We’re in a good place right now,” said Joshua Aguilar, senior vice president at Dallas-based commercial real estate services firm CBRE. “There’s a lot of competition because of the record low vacancy rates in San Antonio, but the construction pipeline is keeping up.”
CoStar Realty Information Inc. indicates that some 9 million square feet of industrial space is set to be delivered in San Antonio over the next few years, including Foster Commerce Center, a $230 million project bringing 2.2 million square feet of industrial real estate to China Grove, on the city’s East Side.
Aguilar said that, conversely, reduced demand and an overabundance of space would indicate an unhealthy market.
“If you look at Laredo, which is another market I serve, they have sub 1% vacancy but demand is still through the roof,” Aguilar explained. “Prices are climbing, but people are willing to pay those premium prices for space – there just isn’t any.”
“When the market softens, that’s when I’d say there might be a problem,” Aguilar said.
San Antonio’s popularity as a logistics hub stems in part from its proximity to the Mexican border as well as its location at the intersection of Interstates 10 and 35, which provide businesses easy access to major Texas markets.
“The spec projects that are being built, between 300,000 to one million square feet, it’s bigger corporations that are looking to occupy that kind of footprint in the city,” Aguilar added.
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