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Old Posted May 27, 2005, 2:01 PM
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Mopacs Mopacs is offline
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Join Date: Jul 2002
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San Antonio Retail Update/Status Report... from United Commercial Realty's website:
http://www.ucrrealty.com/news_detail.php?id=45

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Texas Retail Update - San Antonio
May 9, 2005 by Jeanne M. Peterson

There can be no doubt that San Antonio is experiencing an abundance of growth throughout its industries and key economic factors. San Antonio has firmly established itself as a major Texas city. From advances in its biotechnology services fields to the manufacturing industry with the Toyota plant construction and the explosion of retail projects; San Antonio has seen positive growth as a result of its diversified economy.

The release of the 2004 Fourth Quarter Economic Report, from the Greater San Antonio Chamber of Commerce, marks the eleventh consecutive quarter of positive growth for San Antonio. The job market has expanded rapidly with over 12,000 new jobs added in 2004 alone and economic forecasters anticipating an additional 18,500 jobs for 2005. In comparison with other major cities in Texas, San Antonio generated almost twice the number of new jobs than Austin. In mid-April San Antonio received another boost to its current economic trend with the announcement that the National Security Agency (NSA) had leased the former Sony chip plant on the West Side, and will bring in 1,500 white-collar jobs while simultaneously attracting more military contractors and suppliers to the area as well.

Records continue to be broken as housing-starts surpass those from 2003 by 12 percent. During 2004 12,700 starts were recorded and the projection for 2005 is expected to increase by 5 percent. In the first quarter of 2005, San Antonio Water System (SAWS) has already approved water and sewer service for over 14,000 new homes, to be constructed on the Northwest Side. Residential growth is driving retail growth in San Antonio. Thanks to this housing boom, 180,000 new residents are expected in West San Antonio alone in the next decade. The North-Northeast and Northwest areas are experiencing major growth as well. San Antonio’s superb cost of living is fueled by the healthy demand in the housing market as well as competitive pricing due to the many new builders entering the market including California based Standard Pacific Corp. which recently opened an office in San Antonio. Existing home sales also increased over the past year with as increase of over 8 percent.

Commercial real estate values have also taken an upward turn. Retail development is brisk and the leasing activity is extraordinary. With the demand so high and the supply relatively low, rental rates are increasing. At the end of the fourth quarter of 2004 average rate per retail square foot was $14.75. Within the past year retail vacancies fell just under 1.0 percentage point, notwithstanding the addition of over 900,000 square feet of retail space.

One shadow on the retail market in San Antonio is the Walzem Road/East area. The area is struggling with enormous vacancy, including Windsor Park, a dead mall. While the market is good, there is always room for improvement and clarity of the Unified Development Code (UDC) put into effect two years ago is still subject to interpretation. Government bureaucrats and developers and their engineers don’t always agree on the intent of the written word. Stricter interpretation would actually be more helpful in that it would create more consistency. The San Antonio retail market will continue to be strong in 2005 and 2006, but it will be sensitive to the interest rate. As interest rates rise, so will cap rates, and building activity will slow some. However, there is currently a lot of money available in the lending and equity markets. As long as it does not get too expensive, the financing environment will continue to be strong.

All types of retail projects are doing well, especially big box and lifestyle centers. Big box and lifestyle tenants, like Super Target, HEB and Wal-Mart Supercenter are the most sought-after retailers in part because they attract other tenants. The submarkets currently reflecting the most intense development and growth are found in the North- Northeast and Northwest areas. Berndt Interests, Inc., Birnbaum Property Co., General Growth and many other developers are working on major retail projects in those areas. The highly anticipated Shops at La Cantera will debut high-end retailers such as Neiman Marcus, Nordstrom, and Tiffany & Co. into the San Antonio market beginning in September 2005. Over 4 million square feet of retail space is proposed, at the intersection of IH-10 and Loop 1604. The planned developments at US 281 and Loop 1604 and Potranco Road and Loop 1604 have put San Antonio on the list of top Texas cities for retailers to consider.

Source: San Antonio Express News
“Economy in SA propels it to the top” 2/11/05
“Another big year expected in the housing market” 2/17/05
“California home builder enters SA market” 3/7/05
“SAWS OKs service for big subdivisions” 3/16/05
“NSA will let its dollars do the talking” 4/16/05
Metrostudy Report - 2004
Greater San Antonio Chamber of Commerce
“2004 Fourth Quarter Economic Report”


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