Q2 2012 San Antonio, Texas Commercial Real Estate Economy

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Q2 2012 San Antonio, Texas Commercial Real Estate Economy

Depending on the data source the economy of metropolitan San Antonio is either expanding at a steady pace or surging. According to Current Employment Survey (CES) data from the U.S. Bureau of Labor Statistics (BLS), total non-farm payroll employment increased by 11,200 jobs (1.3%) from June 2011 to June 2012, exactly the same pace of increase as in the previous 12 months. The private sector increase was 15,200 jobs (2.2%), up slightly from a year earlier but offset by increased job losses in Local Government. On the other hand, the increase in the number of employed residents of the Metropolitan Statistical Area (MSA) as measured by household-based data from the BLS is far larger at 18,970 (2.0%) year-over-year in June. This figure includes the self employed. Although the BLS indicates a more moderate pace of labor force growth year-over-year in June at 11,550 (1.1%), Moody’s Economy.com estimates that population growth continues to be strong. The metro area total is rising by about 46,000 (2.0%) per year according to that estimate.

In addition to the Government sector, CES data show San Antonio job growth being held back by a year-over-year decrease of 2,800 jobs (2.7%) in the Professional and Business Services sector, with most of those losses not in Professional Scientific and Technical Services or Administrative and Support Services but in the third component—Management of Companies (headquarters). The Telecommunications industry also lost 400 jobs (8.3%). This implies that some of the weakness is the ongoing fallout of the relocation of the AT&T headquarters from San Antonio, where its former CEO had lived, to the DFW Metroplex, where airline travel connections are better. As a partial offset to this for office landlords, the Financial Activities sector was up by 700 jobs (1.0%) year-over-year in June.

The AT&T related job loss may soon be over, according to the San Antonio Business Journal. Reis reports the local vacancy rate had soared to nearly 30.0% during the Texas real estate bubble of the 1980s, during the previous oil boom. “It was AT&T, then known as SBC Communications Inc., that once helped to revive the downtown office market—starting in 1992, with its move to the IBC Centre building downtown. Over the next several years, SBC/AT&T would absorb some 1.3 million square feet of space in the multi-tenant office market—including close to 900,000 square feet in the central business district. AT&T has since given all of that office space back. On a slightly positive note, the McCullough complex was the last of the big chunks of space AT&T had left to give back.”CES employment data by sector for the latest June-to-June period generally shows slow job growth otherwise. Among the industrial sectors, Manufacturing jobs grew by 800 (1.7%), Wholesale Trade edged up 400 (1.4%), and Transportation and Utilities also added 400 (1.9%). Among consumer-driven sectors, there was an increase 2,700 jobs (2.9%) for Retail Trade. Public fiscal pressures have slowed the growth of the private Health Care and Social Assistance Services sector, which is substantially government subsidized and which had been a major growth sector here, to 1,900 jobs (1.6%), although within the sector the Ambulatory Health Care Services was up by a stronger 2,700 jobs (4.8%). This includes the offices of physicians and health care facilities where people do not remain overnight. Some of the gains in this sector are related to San Antonio’s growing role in military health care, though much of that growth took place in the Government sector. CES data show Federal Government employment up by 400 jobs (1.1%) year-over-year.

The strongest employment gains were in the Construction sector, up by 1,900 jobs (4.5%) after years of loss, and Leisure and Hospitality, up by 7,900 (7.1%).