As we near the end of 2016, we also mark another strong year for the San Antonio retail market. In fact, the market is strong enough that we can retire the word RECOVERY and replace it with EXPANSION.
Expansion, in a nutshell, means that the retail market has not only matched the pre-recession occupancy of 92 percent, it has exceeded it. San Antonio currently posts a healthy occupancy rate of 94 percent, even as key vacancies from Sports Authority came onto the market during the past year.
Like the retail market, San Antonio’s economy also continues to grow, based on solid job, population and job growth. The metro area market, as of November 2016, reports an unemployment rate of 3.5 percent, according to the Texas Workforce Commission. The metro area also ranks No. 6 in the nation for population growth among markets with 1 million people or more.
Due to the expansion of leading concepts in existing space, the market for Class A space remains tighter than the overall market. In fact, centers at the best-performing retail districts throughout San Antonio are typically completely full.
The market’s limited retail construction is dominated by anchor stores, most notably Walmart and H-E-B. These anchors come online with limited or even no small-shop space, ensuring a tight market for space during a time of steady demand for restaurant, services and shop space.
When we finalize our year-end report for San Antonio, we expect to see that the market will have added right 1.3 million square feet during 2016. For a market with high occupancy, the construction total remains conservative. That fact, combined with a construction market dominated by new anchor spaces, means that new construction adds to occupancy, not vacancy.
As you can see, the greater San Antonio retail market benefits from the continued soundness of the metro area’s economy, construction dominated by anchors and retailer expansions that absorb vacant space. That’s why we can confidently say the San Antonio retail market is in the midst of a healthy expansion.