Quarterly Market Report

Transcription

1 SAN ANTONIO INDUSTRIAL APRIL EXECUTIVE SUMMARY Vacancy tightens with demand outpacing supply San Antonio s industrial market tightened during the first quarter of, with the overall vacancy rate decreasing to 5.4%, a drop of 20 basis points quarter-over-quarter, and 40 basis points year-over-year. In addition, net absorption gained traction and rose to 270,831 sq. ft. as of the quarter s end, compared to,486 sq. ft. at the end of the fourth quarter, and up significantly from -277,302 sq. ft. this time last year. New supply delivered to the market fell to 118,716 sq. ft., a decrease of 80% from Q4, and 85% from. There is an additional 3.1 million sq. ft. under construction, with only 27% available for lease. Triple net average asking rents increased marginally by $6 per sq. ft. quarter-overquarter, and $0.24 year-over-year to end at $5.98 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 February. Economic indicators, such as the San Antonio Business-Cycle Index, grew slightly above its long-term trend at an annualized 3.4%. Job growth was moderate, increasing at a 2.9% annualized rate over the three months through February, with increases in construction, mining, and manufacturing. San Antonio s population grew by % 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. Millions Supply & Demand Net Completions Vacancy Market Indicators Current Prior Quarter Q4 % 9% 8% 7% 6% 5% 4% 3% Hundreds Year Ago Vacant Direct 5.1% 5.3% 5.7% Vacant 5.4% 5.6% 5.8% Available Direct 7.6% 7.5% 7.8% Available 8.1% 8.1% 8.3% Net 270,831, ,302 Leasing Activity 708,012 1,096,552 1,696,180 Construction 3,168,163 1,776,129 1,055, , , ,701 Avg Asking Rent (NNN) $5.98 $5.92 $5.74 Inventory 113,127, ,008, ,091,971 HOUSTON AUSTIN SAN ANTONIO

2 SAN ANTONIO INDUSTRIAL Vacancy at 6% or below for 11 consecutive quarters Net by Property Type San Antonio s industrial vacancy rate, measuring all space not currently occupied by a tenant, dropped to 5.4%, down from 5.6% quarter-over-quarter, and down from 5.8% year-over-year. Among the major property types, Warehouse/Distribution ended the quarter at 5.5% vacancy, Manufacturing closed at 2.9% of unoccupied space, and Flex space finished at 9.8% vacancy. Vacancy in the San Antonio industrial market has remained at or below 6% for the last 11 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 warehousing units (60,000+ sq. ft.). The market is awaiting the completion of about 2.8 million sq. ft. of warehouse/distribution space in several new projects that will help alleviate the need for space. Millions - Positive net absorption on the rise At the end of the first quarter, net demand increased to 270,831 sq. ft., a significant increase from,486 sq. ft. last quarter and moving farther out of the red zone seen this time last year at negative 277,302 sq. ft. The amount of space delivered to the market in stood at 119,000 sq. ft., with 76% available for lease. 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; 68,568 sq. ft. of space absorbed by Maestro in Port San Antonio at 709 Raymond Medina St., and Boral moving into 53,483 sq. ft. at Eisenhauer Point - Building 3 in the Northeast sector. The major move-outs involve GSA moving out of 111,800 sq. ft. at 3030 Aniol Road; Bimbo Bakeries USA, Inc. vacating 0,566 sq. ft. at 1923 Nevada St., and Samuels Glass Co. leaving 96,239 sq. ft. at 221 Newell Ave. Vacancy by Property Type 14% 12% % 8% 6% 4% 2% 9.8% 5.5% 2.9% Construction pipeline remains steady A portion of the increase in industrial construction is unquestionably attributable to ecommerce, which has strengthened industrial sector demand. Consequently, industrial completions have been relatively strong; delivering 13.3 million sq. ft. of warehouse/distribution space to the San Antonio industrial market over the last years. There is currently 3.1 million sq. ft. under construction, with the majority, or 90%, warehouse/ distribution space. The largest projects underway at the end of the first quarter are a $150 million, millionsq.-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 Millions Construction by Property Type

3 SAN ANTONIO INDUSTRIAL 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 is located at 176 Ben E. Keith Way in the Comal County submarket. Millions Completions by Property Type Investment sales activity up 55% Real Capital Analytics data reports year-to-date as of March 31, industrial sales volume in the San Antonio area at $73.8 million, resulting in a year-overyear change of 55.7%. The buyer composition is made up primarily of REIT/Listed investors at 77%, with the remaining private buyers at 23%. A top investment sale in the San Antonio industrial market is the Colony Industrial acquisition of the Enterprise Industrial Park in Schertz, for the two-building, Class A light industrial complex totaling 639,797 sq. ft. from Robinson Weeks Partners. The property was 88% occupied at the time of the $52.1 million sale. This sale represents the increasing need of ecommerce business for welllocated, warehouse space for the last mile in the logistics chain. Millions San Antonio Industrial Cumulative Monthly Sales Volume Source: Real Capital Analytics Leasing activity decelerated Leasing activity slowed during the first quarter with a total of 708,000 sq. ft. in the San Antonio industrial market. This is in comparison to million sq. ft. leased throughout Q4, and 1.7 million sq. ft. this time last year. The largest lease signings occurring in included the 78,000-sq.-ft. lease at 1803 Grandstand Dr. in the Northwest submarket; the 48,933-sq.-ft. deal inked at Eisenhauer Point Business Park in the Northeast submarket; and the 44,000-sq.- ft. lease completed by OmniSource at Eisenhauer Distribution Center, also in the Northeast submarket. These three lease transactions totaling 171,000 sq. ft. all have move-in dates during Q2. Average asking NNN rates at all-time high The industrial market saw overall NNN average asking rates rise $6 per sq. ft. quarter-over-quarter, and $0.24 year-over-year to finish at $5.98 per sq. ft. an all-time high at the end of. The Northwest submarket has the highest prices overall for industrial space at $8.54. The Avalon at 9630 Corporate Dr. in Selma, TX Guadalupe County is asking $ $15.00 NNN top rent for Flex space; Manufacturing rates peak at $5.41 in the Northeast submarket; and Warehouse/Distribution space has an average asking price of $5.43 across all major property types J F M A M J J A S O N D Overall Average Asking NNN Rents by Submarket Northwest N Central CBD Guadalupe South Comal Northeast $9 $8 $7 $6 $5 $4 $3 3

4 SAN ANTONIO INDUSTRIAL Submarket Stats Submarket Statistics Inventory Vacancy Availability Under Construction Avg Asking Rent ($/PSF) San Antonio Market 113,127, , , , ,716 3,168, Flex 11,709, ,001 40,001 40,500 40, , Manufacturing 23,456, ,932 7, Warehouse/Distribution 77,961, , ,898 78,216 78,216 2,839, Submarket Statistics Inventory Vacancy Availability Under Construction Avg Asking Rent ($/PSF) CBD 3,202, Flex 442, Manufacturing 809, Warehouse/Distribution 1,950, Comal County 12,115, ,871 18, , Flex 251, Manufacturing 2,887, ,515 22, Warehouse/Distribution 8,976, ,644-3, , Guadalupe County,072, ,028 50, , Flex 185, Manufacturing 4,099,803 26,200 26, Warehouse/Distribution 5,787, ,828 23, , North Central 14,252, ,205 55, , Flex 3,704, ,517 64, , Manufacturing 1,580, ,829-13, Warehouse/Distribution 8,967, ,517 4, Northeast 36,033, ,261 53,261 78,216 78, , Flex 2,306, , Manufacturing 4,922, ,954-48, Warehouse/Distribution 28,805, ,266 2,266 78,216 78, , Northwest 17,409, ,199 13,199 40,500 40, , Flex 4,422, ,795-16,795 40,500 40,500 80, Manufacturing 2,745, Warehouse/Distribution,242, ,994 29, , South 20,040, ,267 80, ,579, Flex 397, ,670-7, Manufacturing 6,412, ,000 22, Warehouse/Distribution 13,230, ,937 65, ,579,

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 APRIL 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