SAN ANTONIO-Though San Antonio is known mostly as the Alamo City, it also is known for a strong medical district. According to Q2 figures released by local commercial real estate company NAI REOC, healthcare real estate demonstrated a solid performance, with healthcare-related tenant activity spilling over into other commercial real estate segments.

Specifically, in an analysis of 6.3 million square feet of healthcare real estate, positive net absorption for the quarter was 59,867 square feet, which was led by the northeast submarket (20,467 square feet) and the northwest submarket (20,282 square feet). The area-wide vacancy at 16.8%, down slightly from the 17% reported during Q1 2013, and from 19% reported from Q2 2012.

Furthermore, according to Kim Gatley, NAI REOC's senior vice president and director of research, healthcare tenants are seeking space outside of medical office buildings. “In a much broader sense, overall absorption is even stronger than the numbers really reflect because some medical-related tenants are landing in buildings other than those included in the medical-only tracked set,” Gatley says. Within the general office market, for example, recent leases included:

• Carenet Healthcare Services, which leased 13,012 square feet at Brooks City-Base south of the CBD.
• Center for Health Care Services, which took down 12,455 square feet at the Packard Building, located downtown.

The report also points out that some physician groups are taking advantage of low interest rates to purchase their own facilities. Furthermore, the construction pipeline is active:

• Victory Healthcare and Medistar Corp. recently delivered the 95,000-square-foot Victory Medical Center to market.
• Vanguard Health Systems is developing its 125-bed Resolute Health Hospital & Wellness Center in New Braunfels (northeast of San Antonio).
• Construction has been launched on the 45,000-square-foot Westover Hills Medical Building, in the far west San Antonio submarket.
• Also in the far west, and also under construction is the 70,000-square-foot Westover Hills Medical Plaza III, adjacent to the CHRISTUS Santa Rosa Westover Hills Hospital.