Overall rental rates dropped 26 cents per sf to $11.05 per sf, which was where they were at the beginning of the year. The overall vacancy rate at yearend was 14.19% from 15.01% at midyear. And, in the past six months, the market absorbed 408,400 sf. That's the report from Dallas-based Weitzman Group's retail building report for the end of 2001.
The absorption number was "extremely strong," Cale Hahn, the research direct of Weitzman's San Antonio office, tells GlobeSt.com. Much of the total came from the 205,000-sf, fully leased expansion of the Northwoods Shopping Center, at US Highway 281 and Loop 1604 in the north central submarket. The northwest submarket absorbed 318,000 sf, the biggest number in San Antonio. Even the city's regional malls posted 51,610 sf in absorbed space.
The struggle for tenants can be seen in the numbers for the two strongest submarkets: the north central and the northwest. The north central submarket ended the year with a 91.9% occupancy rate, down 0.5% from midyear. Rental rates were flat, dropping just 15 cents per sf to $13.89 per sf. In the northwest submarket, occupancy jumped to 90% from 86% while rents fell 17 cents to $11.34 per sf.
Why is the northwest submarket growing like gangbusters while the north central submarket has flattened out? Look at those rental rates. They are $2.55 per sf less in the northwest submarket than the neighboring north central. "I believe the retailers (looking to cut costs) are reacting to that," Hahn says.
Overall, Hahn says rents will continue to drop as building owners try to generate revenue from their properties in an unsure economy. He pointed to the power center category where the yearend occupancy rate was 93.6%, 0.27% higher than midyear. Rental rates, however, have dropped $1.69 per sf. "I think property owners are getting a little concerned about the uncertainty in the retail market and they're wanting to fill up any existing vacancies they have," he says. "So they are competing, very much, in terms of rental rates."
For the future, Hahn says San Antonio should be able to keep up with retail growth. The community's retail sales have been 1% to 1.5% higher than the rest of the nation and its medical and military sectors remain strong, he says. "The outlook is real strong.
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