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2002 Bumpy Ride In Store for San Antonio Real Estate

SAN ANTONIO-The initial forecast for San Antonio is cautionary as researchers map out another sluggish year. The Grubb & Ellis report says the downturn will drag into 2003 for the city, save for its class B and C multifamily products.

By Tim Green | Updated on January 03, 2002

SAN ANTONIO-Commercial real estate will see a rocky 2002 with multifamily as San Antonio’s only bright spot, according to Grubb & Ellis Inc.’s start-of-the-year forecast. Office, industrial and retail–tripped up in 2001 by the slowing national economy–won’t get much relief until 2003. Multifamily, which plays to San Antonio’s demographics, should continue to prosper.

The office market ended 2001 with a 15.3% citywide vacancy rate and a negative absorption of 483,000 sf, all in suburban submarkets. Much of the space came to the market after layoffs by companies responding to economic conditions. The biggest, Grubb & Ellis says, was SBC Communications’ cut of several thousand employees and putting 193,000 sf up for sublease.

The forecast said employment should rebound by mid-2002 and bring office occupancy with it. Rents will continue to drop throughout the year, abetted by aggressive concessions. With a national economic recovery, the San Antonio office market will show positive gains in 2003, according to the forecast.

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