Quarterly Market Report

Transcription

1 SAN ANTONIO INDUSTRIAL JULY EXECUTIVE SUMMARY Tight market conditions result in rising rents San Antonio s industrial market remained tight during the second quarter of, with the overall vacancy rate rising slightly to 5.7%, an increase of 20 basis points quarter-over-quarter, and unchanged year-over-year. In addition, net absorption continued to stay in positive territory at 72,765 sq. ft. as of the quarter s end, compared to 136,648 sq. ft. at the end of the first quarter, and 173,420 sq. ft. this time last year. New supply delivered to the market rose to 311,909 sq. ft., an increase of 65%-75% quarter-overquarter and year-or-year. There is an additional 3.9 million sq. ft. under construction, with about 40% available for lease. Triple net average asking rents rose by $0.51 per sq. ft. quarter-overquarter, and $0.70 year-over-year to end at an annual rate of $6.47 per sq. ft. an all-time high. Moderate job growth in San Antonio The San Antonio economy continued to grow at a steady pace in May. Economic indicators, such as the San Antonio Business-Cycle Index, increased at a 2.2% annualized rate in May, comparable to that of April. Job growth softened, decreasing at a 0.5% annualized rate over the three months through February, with increases in construction, mining, and manufacturing. San Antonio s population grew by 2.0% in, similar to and near its long-term average of 2.1%. The unemployment rate increased slightly to 3.4% in February as the Texas and U.S. rates held steady at 4.0% and 4.1%, respectively. Supply & Demand Millions Market Indicators Net Completions Vacancy Current Prior Quarter Q1 9% 8% 7% 6% 5% 4% Year Ago Vacant Direct 5.5% 5.3% 5.6% Vacant 5.7% 5.5% 5.7% Available Direct 8.9% 7.7% 7.5% Available 9.4% 8.2% 8.0% Net 72, , ,420 Leasing Activity 744, ,714 1,728,697 Construction 3,942,060 3,332,038 1,360, , , ,442 Avg Asking Rent (NNN) $6.47 $5.96 $5.77 Inventory 114,034, ,722, ,772,718 HOUSTON AUSTIN SAN ANTONIO

2 SAN ANTONIO INDUSTRIAL Vacancy at 6% or below for 12 consecutive quarters Net by Property Type San Antonio s industrial vacancy rate, measuring all space not currently occupied by a tenant, stood at 5.7%, up from 5.5% quarter-over-quarter, and flat year-overyear. Among the major property types, Warehouse/ Distribution ended the quarter at 5.7% vacancy, Manufacturing closed at 3.7% of unoccupied space, and Flex space remained at 9.8% vacancy. Vacancy in the San Antonio industrial market has remained at or below 6% for the last 12 consecutive quarters, or Q3. With the rate at such a low level, small fluctuations up and down are not particularly significant. Supply shortages continue in the industrial market for certain types of space, especially large warehouse/distribution properties between 60,000 and 0,000 sq. ft. The market is awaiting the completion of close to 4.0 million sq. ft. of industrial space 39.4% of which is available for lease to help meet the demand. Millions Net absorption remains positive Vacancy by Property Type At the end of the second quarter, net demand stood at 72,765 sq. ft., a decrease from 136,648 sq. ft. last quarter and 173,420 sq. ft. this time last year. The amount of space delivered to the market in stood at 311,909 sq. ft., with about half of that space occupied. The major move-ins contributing to positive net absorption in include Southern Warehousing & Distribution occupying 140,272 sq. ft. of space at 3200 E. Houston St. in the Northeast submarket; 78,000 sq. ft. of space absorbed by Taprite in Alamo Downs Distribution Center, and Michael Edwards Custom Cabinetry & Millwork moving into 70,268 sq. ft. at 6305 Camp Bullis Road. The major move-outs involve GSA moving out of 111,800 sq. ft. at 3030 Aniol Road; Staples returning 1,287 sq. ft. at Binz Engleman Distribution Center; and Bimbo Bakeries USA, Inc. vacating 0,566 sq. ft. at 1923 Nevada St. 14% 12% % 8% 6% 4% 2% 9.8% 5.7% 3.7% San Antonio hot spot for new development There is currently close to 4.0 million sq. ft. under construction, with the majority, or 88%, Warehouse/ Distribution space. The largest projects underway at the end of the second quarter are a $150 million, 1.5 million-sq.-ft. distribution center for TJX Companies Inc., the parent company of the T.J. Maxx and Marshalls retail chains, bounded by Loop 4 on the north, Goeth Road on the south, the San Antonio River on the east and U.S. on the west; and the Ben E. Keith Co. food service distribution facility in Selma, replacing one that has operated in northeast San Antonio since the 1990s. As part of the incentive package, the city agreed to change the name of the street on which the distribution facility is being built from Alamo Parkway to Ben E. Keith Way, thus, the 563,000-sq.-ft. project Millions Construction by Property Type

3 SAN ANTONIO INDUSTRIAL is located at 176 Ben E. Keith Way in the Comal County submarket. Northeast San Antonio is booming In the Northeast submarket, plans to break ground on two new industrial buildings at Eisenhauer Point Business Park are underway. The park is currently home to six industrial buildings with the new 336,000-sq.-ft. industrial development bringing the park s total area to more than 800,000 sq. ft. The buildings are expected to deliver in Q In addition, a $16.8 million industrial project is in the construction pipeline, also in the Northeast submarket. The 431,525-sq.-ft. Pan Am West Industrial Park is being developed at 3319 I- Frontage Road and will include four one-story industrial buildings ranging in size from 82,000 to 120,000 sq. ft. The project is scheduled to break ground in Q3 with an anticipated completion date of Millions Completions by Property Type Colony acquires third Enterprise Industrial Park building Real Capital Analytics data reports year-to-date as of June 30, industrial sales volume in the San Antonio area at $119.0 million, resulting in a year-overyear change of -63.0%. The current buyer composition is made up of half REIT/listed investors at 56%, private buyers at 20%, plus cross-border and user/other investors representing 12% each. A notable transaction during included Colony Industrial purchasing Enterprise Industrial Park Building III, a 9,251-sq.-ft. warehouse and distribution property. Colony bought buildings I and II in Q1. Leasing activity remained steady Leasing activity remained between 725,000 and 750,000 sq. ft. during the first half of in the San Antonio industrial market. This is in comparison to 1.7 million sq. ft. leased this time last year, a drop of close to 60%. The largest lease signings occurring in included the 78,000-sq.-ft. lease signed by Taprite at Alamo Downs Distribution Center in the Northwest submarket; the 44,000-sq.-ft. deal inked by Omni Source at Eisenhauer Distribution Center in the Northeast submarket; and the 42,473-sq.-ft. lease completed by Ferguson at Eisenhauer Point Business Park, also in the Northeast submarket. These three lease transactions totaling 165,000 sq. ft. all have move-in dates during. Average asking NNN rates continue to climb The industrial market saw overall NNN average annual asking rates climb $0.51 per sq. ft. quarter-overquarter, and $0.70 year-over-year to finish at $6.47 per sq. ft. a continued record-breaking high at the end of. The availability and cost of quality distribution space in the first half of should continue into the second half. Millions San Antonio Industrial Cumulative Monthly Sales Volume Source: Real Capital Analytics J F M A M J J A S O N D Overall Average Asking NNN Rents by Submarket $.50 $9.00 $7.50 $6.00 $4.50 Northwest N Central CBD Guadalupe South Comal Northeast $3.00 3

4 SAN ANTONIO INDUSTRIAL Submarket Stats Submarket Statistics Inventory Vacancy Availability Net Net Under Construction Avg Asking Rent ($/PSF) San Antonio Market 114,034, , , , ,147 3,942, Flex 11,913, , ,720 80, ,554 3, Manufacturing 23,624, , , , Warehouse/Distribution 78,495, , , , ,593 3,481, Submarket Statistics Inventory Vacancy Availability Net Net Under Construction Avg Asking Rent ($/PSF) CBD 3,216, ,236-32, Flex 442, Manufacturing 809, Warehouse/Distribution 1,964, ,236-32, Comal County 12,195, ,348 75, , Flex 239, Manufacturing 2,888, ,171 18, Warehouse/Distribution 9,067, ,519 57, , Guadalupe County,072, ,9 68, , Flex 185, ,590-2, Manufacturing 4,099, , Warehouse/Distribution 5,787, ,500 45, , North Central 14,321, ,258-45, , Flex 3,689, ,466 45, , Manufacturing 1,580, ,004-29, Warehouse/Distribution 9,051, ,788-61, Northeast 36,199, , , , ,663 5, Flex 2,421, ,573 7, , Manufacturing 4,922, , , Warehouse/Distribution 28,856, ,619 16, , , , Northwest 17,774, , , , , , Flex 4,528, ,732 5,687 80, , Manufacturing 2,745, Warehouse/Distribution,500, , ,659 96,930 96, , South 20,253, ,068 78, ,245, Flex 407, , , Manufacturing 6,579, , , Warehouse/Distribution 13,267, ,512 62, ,063,

5 SAN ANTONIO INDUSTRIAL San Antonio Industrial Submarkets 1. CBD 2. Comal County 3. Guadalupe County 4. North Central 5. Northeast 6. Northwest 7. South Information and data within this report were obtained from sources deemed to be reliable. No warranty or representation is made to guarantee its accuracy. SAN ANTONIO INDUSTRIAL JULY NAI Partners San Antonio Office 20 NE Loop 4, Suite 8 San Antonio, Texas tel Leta Wauson Director of Research leta.wauson@naipartners.com tel