There have been some positive signs for the San Antonio office space market. From the debut of the headquarters for the local company Tesoro Corporation and the consolidation of operations for Wells Fargo, these moves are being seen as very positive signs for the San Antonio economy. However, these positive signs for the economy left more than 220,000 square feet of office space vacant.
Combine that with the highest office space vacancy in years for San Antonio, and it’s clear to see that San Antonio has a bit of an office space issue. In fact, the end of the third quarter of 2009 brought on San Antonio’s highest office space vacancy rate in five years – 18.4 percent. In comparison, the vacancy rate for San Antonio office space was 14.2 percent for the same period in 2008.
Lending Standards at a Standstill
The nationwide credit crisis has greatly affected any new investment for the San Antonio office sector. Unfortunately, the clampdown on lending in San Antonio has brought new investment in San Antonio to a veritable halt. New projects are simply not able to get off the ground, thereby leaving developers with no other options for financing. However, many developers are unwilling to start new projects anyway because of a lack of demand. With all of the doom and gloom of the office space sector in San Antonio, rental prices still continue to increase: rental rates for San Antonio stood at $20.41 per square foot in September 2009, compared to $20.24 September 2008. Many times, however, the concessions that are being offered by landlords may affect these prices.
Still Going Strong
Despite the tough lending standards and vacancy challenges, the office market in San Antonio is still posting gains. The bottom line is that San Antonio is still an attractive place to do business. The low business costs and the high quality of life continue to attract new businesses to this dynamic region of Texas.