Industrial real estate is still booming in San Antonio, with little indication that interest rate hikes or fears of a recession have had much effect.
Data from CBRE Group and Stream Realty Partners found the vacancy rate for warehouses and other industrial spaces ranged from 4 to 5 percent in the third quarter, the San Antonio Business Journal reported. A net 1.2 million square feet of industrial space was also absorbed by tenants during the same time period.
The data shows that in 2022 San Antonio’s industrial market had a net absorption of 8.7 million square feet by the end of the third quarter, an all-time high for the city. About a third of the absorption came when Tesla moved into a 440,000-square-foot warehouse on the Far East Side.
Carlos Marquez, Stream’s lead for industrial real estate operations in San Antonio, said the city’s industrial supply is struggling to meet the demand. Multiple projects under construction are set to help boost the city’s supply when they’re completed in 2023.
“Tenant demand remains at an all-time high and we expect the vacancy rate to remain low, even with 7 million square feet under construction,” Marquez told the outlet. “There is a shortage of bulk warehouse space over 155,000 square feet, and tenants are waiting for the next wave of speculative construction to be delivered.”
Senior vice president of CBRE’s San Antonio industrial and logistics division, Rob Burlingame said the industry has improved, but it still has some supply chain issues to work through.
“You still have a little bit of the Covid hangover effect where the supply chain is still creating some shortages,” Burlingame told the outlet. “It’s still better than it has been, but it’s still not back to normal. It’s taking buildings longer to be built than it has previously.”
Likely due to the limited supply, the average asking rate for a distribution center or warehouse has also climbed to $6.46 per square foot.
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