Sperry Van Ness International Corporation’s (SVNIC) 2015 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Retail Markets to Watch. Not the largest or the most actively contested markets, the 2015 Retail Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.
Top Retail Market to Watch: San Antonio, TX
Contrasting national trends, San Antonio’s retail inventory grew in leaps and bounds in 2014. Developers added roughly 2 million square feet of new retail space during the year, nearly doubling the tally of deliveries from the market low point in 2012. Despite the new supply, occupancy has edged higher. CoStar reported a 5.5% vacancy rate for the fourth quarter of 2014, below San Antonio’s long-term average. Asking rents were relatively flat over the year but are expected to ramp up. Investors in the market may find that cap rates still reflect the slower rate of income gains, affording an opportunity for investment at a discount to fundamentals.
The balance of San Antonio’s retail development in 2014 came from large chain stores like Walmart and Sam’s Club. Walmart made big moves with the opening of a new Supercenter, as well as four smaller locations. Texas-based supermarket chain H-E-B also experimented with new concepts in 2014, renovating its oldest operating location on Nogalitos Street into its first two-story market in Texas. H-E-B plans to expand its corporate headquarters in downtown San Antonio, and build an adjoining 12,000-square-foot market, the only grocery store in the urban core. Once-troubled retail corridors, like Austin Highway, are seeing new life thanks to complementary multifamily development in the area.
To read more on San Antonio and other top retail markets, download the full version of the 2015 Top Retail Markets to Watch report here.
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