The 28.8-million-square-foot San Antonio community-neighborhood shopping center market did not achieve enough net absorption to offset the completion of the 99,350-square-foot Walzen Redevelopment neighborhood center in the second quarter, and the vacancy rate rose 10 basis points to 11.6%. That is down 70 from a year earlier. The rate was unchanged in July, but with the 228,000-square-foot Terrell Plaza Redevelopment community center expected to complete construction in October, year-end 2012 vacancy is forecast at 11.7%. Annual net absorption at 350,000 square feet in 2012 is expected to slightly exceed the construction total of 327,000, a pattern expected to be repeated in subsequent years as the vacancy rate drifts below 11.0%.
Community-neighborhood shopping center rents are increasing very little. In the second quarter both the average asking rent and the average effective rent rose 0.3% and 0.4% to $14.86 psf and $13.15 psf. The effective average added a penny in July. Weak gains of less than 1.0% by both measures are forecast for all of 2012. Annual gains are forecast to improve in subsequent years, but without ever exceeding 3.5%.
The power center vacancy rate of 5.2% for the second quarter is down 80 basis points from the prior quarter and 220 from a year earlier. The average asking rent of $24.44 psf is up 0.1% year-over-year. While nearly 3 million square feet of power center space is planned or proposed, none is under construction. The 60,000-square-foot retail component of the Eilan mixed use development completed construction in May. The 180,000-square-foot first retail phase of the Tacara mixed-use project remains under construction, with a September completion projected.
“Major retailers will move forward with expansion plans in San Antonio this year, hastening the pace of the recovery,” Marcus & Millichap predicted in a second quarter report. This source forecast a vacancy rate of 9.0% and an average asking rent of $14.58 psf for year-end 2012.