San Antonio’s retail market as of year-end 2024 is reporting record high occupancy as it continues its longest-ever streak of balanced supply-and-demand.
With the new 2024 year-end result, the Alamo City retail market has posted healthy occupancy of 90 percent or higher for 14 years straight.
As of year-end, the market reported overall occupancy of 95.2 percent due to stable tenant retention and strong demand for well-located vacancies. For example, shortly after Conn’s announced in mid-2024 that it planned to close its area stores, popular retailer Burlington announced its plans to backfill three of the nine stores slated for closure.
The market is also reporting an increase in new construction, but the deliveries overall increase occupancy due to the fact that they are primarily for anchor stores and largely pre-leased shop space.
The occupancy rate is based on Weitzman’s review of a total San Antonio retail inventory of approximately 49.0 million square feet of retail space in multi-tenant shopping centers with 25,000 square feet or more.
During 2024, the San Antonio area has seen limited chain closures create new vacancies due to the chain-wide failure of Conn’s, Big Lots, American Freight Furniture and the 99 Cents Only chain. (Additionally, Party City plans to close its stores in 2025, but four San Antonio-area stores may stay open under separate ownership.)
But these newly vacant spaces are not large format, limiting their impact on the occupancy rate. Additionally, in a tight market like San Antonio’s, retail vacancies are seen by retailers as opportunities and by landlords as candidates for stronger tenancy.
The limited closures also were outpaced by the number of expanding retailers backfilling vacant boxes and small-shop retail.
Key examples of backfilled space to date in 2024 include:
• Burlington, which is backfilling former Conn’s locations, with 40,000 square feet in San Antonio Crossing at 11600 Bandera Road; 30,000 square feet in Brooks Corner at 3143 S.E. Military Drive; and 36,803 square feet in Crosstowne Mercado at 4807 W. Commerce Street;
• EoS Fitness, which is backfilling an approximately 40,000-square-foot space in Windsor Park Center, a power retail center located at Fourwinds Drive at Loop 410;
• Family Leisure, an outdoor furniture retailer, which took the 152,000-squar-foot former Macy’s space at Rolling Oaks Mall, located at 6909 N. Loop 1604 E.;
• Homesense, a new retail concept from TJX Cos, Inc., which opened in a 25,000-square-foot backfilled junior anchor space at The Rim. Homesense also will open in a 30,256-square-foot former Bed Bath & Beyond vacancy at Northwoods Shopping Center at Loop 1604 and U.S. 281 in 2025;
• Holey Moley, a mini-golf concept, which in late 2024 opened in approximately 13,000 square feet at The Shops at Rivercenter mall in downtown. Also at Rivercenter, a 21,000-square-foot space will be home to Mexico Ceaty, offering full-service restaurant space, a bar, a café/bakery and food stands;
• Outlaw Pickle, a pickleball concept, which is backfilling a 21,000-square-foot space at Park North Shopping Center at 742 Northwest Loop 410. The concept is set to open in 2025;
• Dill Dinkers Pickleball, a pickleball concept, which is backfilling 15,500 square feet previously occupied by Tuesday Morning at Blanco Market, located at 18450 Blanco Road. The new location is set to open in 2025;
• Daiso, a concept based in Japan, which opened its first area store during the first half of 2024 in 5,661 square feet of retail in Alamo Ranch, a shopping center located at 503 W. Loop 1604 N. In the second half of 2024, Daiso opened in approximately 6,600 square feet at Valley View Shopping Center, at 8521 Blanco Road; in 10,400 square feet in Thousand Oaks Shopping Center, located at 2939 Thousand Oaks Drive; and in 8,518 square feet in Westover Marketplace, at 8203 SH-151;
• Teso Life, a Japanese retailer, which is opening in 2025 in the approximately 26,000-square-foot former Mega Furniture space in University Square at De Zavala, located at 12730 IH-10 W, for its first San Antonio store;
• Ollie’s Bargain Outlet, which acquired the lease of the 99 Cents Only store at 2942 Thousand Oaks Drive after the dollar store chain failed earlier this year. The San Antonio location was one of 11 that Ollie’s acquired as a result of 99 Cents Only bankruptcy in April 2024;
• Panera, which redeveloped the former freestanding Compass Bank for a new restaurant location at Culebra Market Shopping Center, located at 10628 Culebra Road.
RENTS REMAIN HIGHEST FOR NEWLY CONSTRUCTED SPACE
Thanks to a tight market for quality retail space and extremely limited new construction, San Antonio’s asking retail rental rates remain stable, and concessions such as finish-out allowances and free rent remain limited. Additionally, for the highest-visibility spaces in the market’s newest projects, rates are typically in the mid-$40s-per-square-foot range up to mid-cap spaces going near or at the $50-per-square-foot level.
Asking rates for centers by grade reported the following averages:
• Average Class A asking rents for small-shop in-line spaces in the market’s strongest centers, including new construction, ranged from $28 to $38 per square foot per year, and reached into the $40s for endcap spaces in the best centers. Further, asking rates for small-shop space in the market’s newest planned projects can be as high as $50 per square foot or slightly more, setting a new high for the market;
• Class B asking rates typically were in the $18-to-$26-per-square-foot range;
• Class C asking rates were in the $10-to-$16-per-square-foot range.
The reported rates are average asking rates and do not reflect concessions or triple nets; triple nets also are reaching higher levels due to increased insurance costs and higher property valuations.
Asking rates can be higher or lower depending on submarket, location, co-tenancy, position within a center, the center’s physical condition and other factors.
SAN ANTONIO RETAIL DELIVERIES RISE BUT REMAIN LIMITED
For the calendar-year 2024, the market reported approximately 423,000 square feet in new or expanded retail projects with 25,000 square feet or more.
The 2024 total remains extremely conservative, especially for a market with high occupancy and healthy demand. But the annual construction total represents an increase over 2023’s deliveries totaling approximately 279,000 square feet.
Reflecting a statewide trend, the San Antonio market is reporting limited anchor expansions via new space, with junior anchors like discounters and fitness concepts often opening in existing space. As a result, the availability of such large-format spaces is becoming increasingly limited.
Construction also has remained constrained due to factors including construction costs, which are at levels that often require higher-than-market rental rates to economically justify a project.
NOTE: Weitzman tracks only new projects with 25,000 square feet or more.
OUTLOOK REMAINS OPTIMISTIC BASED ON STRONG ECONOMY
San Antonio’s retail market currently reports a healthy balance of supply and demand, and the outlook for 2025 expects that health to continue.
Based on the most recent Census figures, San Antonio ranks as the nation’s fastest-growing large city with annual growth of 22,000 new residents.
Further, the Federal Reserve’s most recent report for the metro area shows that the annualized job growth rate is a healthy 3.6 percent, with a low unemployment rate of 3.7 percent (September 2024).
With a strong combination of job growth and population growth, the outlook for San Antonio’s retail market remains positive for the foreseeable future.
One short-term issue, however, is resulting because San Antonio is currently in the midst of several major highway redevelopment projects. While these projects improve traffic mobility and safety in the long term, they can create major traffic jams in the short term, hobbling easy access at some key major intersections or even causing drivers to seek alternative routes. As a result, the market may see limited but increased vacancies among retailers and restaurants that benefit most from visibility and access. Ongoing highway construction projects include the Loop 1604 North Expansion Program, The SH-151 Corridor improvement program and the I-35 Northeast Expansion (NEX) Program.
