By William McDonough, vice president, Weitzman
San Antonio’s retail market is reporting record-high occupancy as it continues its longest-ever streak of balanced supply and demand.
With a new high of 95.2 percent, the Alamo City retail market has now posted healthy occupancy rates of 90 percent or higher for 14 years straight. The occupancy rate is based on Weitzman’s review of a total San Antonio retail inventory of approximately 49 million square feet of retail space in multi-tenant shopping centers with 25,000 square feet or more.
Occupancy remains high due to stable tenant retention and strong demand for well-located vacancies. For example, shortly after Conn’s announced in mid-2024 that it planned to close its area stores, discount apparel retailer Burlington announced its plans to backfill three of the nine stores slated for closure.
The market is also reporting an increase in new construction, but the deliveries overall have actually increased occupancy due to the fact that they are primarily for anchor stores and largely preleased shop space.
Last year, the market did see new vacancies created due to the chain-wide failures of Conn’s, Big Lots, American Freight Furniture and 99 Cents Only.
But in a tight market like San Antonio’s, retail vacancies are seen by retailers as opportunities and by landlords as candidates for stronger tenancy. In addition, the limited closures also were outpaced by the number of expanding retailers backfilling vacant boxes and small-shop retail.
Key examples of backfilled spaces in 2024 include:
- Burlington, which is backfilling former Conn’s locations, with 40,000 square feet in San Antonio Crossing at 11600 Bandera Road; 30,000 square feet in Brooks Corner at 3143 SE Military Drive; and 36,803 square feet in Crosstowne Mercado at 4807 W. Commerce Street;
- EoS Fitness, which is backfilling an approximately 40,000-square-foot space in Windsor Park Center, located at Fourwinds Drive at Loop 410;
- Family Leisure, an outdoor furniture retailer, which took the 152,000-square-foot former Macy’s space at Rolling Oaks Mall, located at 6909 N. Loop 1604 E.;
- Homesense, a concept from TJX Cos. Inc., which opened in a 25,000-square-foot backfilled junior anchor space at The Rim. Homesense also is backfilling a 30,256-square-foot former Bed Bath & Beyond store at Northwoods Shopping Center at Loop 1604 and U.S. 281 in 2025;
- Holey Moley, a minigolf concept, which opened in approximately 13,000 square feet at The Shops at Rivercenter mall in downtown. Also at Rivercenter, a 21,000-square-foot space will be home to Mexico Ceaty, offering full-service restaurant space, a bar, a café/bakery and food stands;
- Outlaw Pickle, a pickleball concept, which is backfilling a 21,000-square-foot space at Park North Shopping Center at 742 Northwest Loop 410;
- Dill Dinkers Pickleball, which is backfilling 15,500 square feet previously occupied by Tuesday Morning at Blanco Market, located at 18450 Blanco Road;
- Daiso, a concept based in Japan, which opened its first area store in 5,661 square feet of retail in Alamo Ranch, a shopping center located at 503 W. Loop 1604 N. Daiso also opened in approximately 6,600 square feet at Valley View Shopping Center, at 8521 Blanco Road; in 10,400 square feet in Thousand Oaks Shopping Center, located at 2939 Thousand Oaks Drive; and in 8,518 square feet in Westover Marketplace, at 8203 SH-151;
- Teso Life, a Japanese retailer, which is backfilling the approximately 26,000-square-foot former Mega Furniture space in University Square at De Zavala, located at 12730 IH-10 W, for its first San Antonio store;
- Ollie’s Bargain Outlet, which acquired the lease of the 99 Cents Only store at 2942 Thousand Oaks Drive after the dollar store chain failed;
- Panera, which redeveloped the former freestanding Compass Bank for a new restaurant location at Culebra Market Shopping Center, located at 10628 Culebra Road.
Rents Peak for Newly Constructed Space
Thanks to a tight market for quality retail space and extremely limited new construction, San Antonio’s asking retail rental rates remain stable, and landlord concessions such as finish-out allowances and free rent remain limited. Additionally, for spaces with maximum visibility in the market’s newest projects, rates are typically in the mid-$40s-per-square-foot range up to mid-cap spaces going near or at the $50-per-square-foot level.
Asking rates for centers by grade reported the following averages:
- Average Class A asking rents for small-shop, inline spaces in the market’s strongest centers, including new construction, ranged from $28 to $38 per square foot per year and reached into the $40s for endcap spaces in the best centers. Further, asking rates for small-shop space in the market’s newest planned projects can be as high as $50 per square foot or slightly more, setting a new high for the market;
- Class B asking rates typically were in the $18- to -$26-per-square-foot range;
- Class C asking rates were in the $10- to -$16-per-square-foot range.
The reported rates are average asking rates and do not reflect concessions or triple nets. Asking rates can be higher or lower depending on submarket, location, co-tenancy, position within a center, the center’s physical condition and other factors.
Retail Deliveries Rise But Remain Limited
For the calendar-year 2024, the market reported approximately 423,000 square feet in new or expanded retail projects with 25,000 square feet or more.
The 2024 total remains extremely conservative, especially for a market with high occupancy and healthy demand. But the annual construction total represents an increase over 2023’s deliveries totaling approximately 279,000 square feet.
Reflecting a statewide trend, the San Antonio market is seeing limited anchor expansions via new space, with junior anchors like discount retailers and fitness concepts often opening in existing spaces. As a result, the availability of such large-format spaces is becoming increasingly limited.
New development also has remained constrained due to factors including construction costs, which are at levels that often require higher-than-market rental rates to economically justify a project.
Strong Economic Outlook
San Antonio’s retail market currently has a healthy balance of supply and demand, and the outlook for 2025 includes the expectation that said health will continue.
Based on the most recent U.S. Census Bureau figures, San Antonio ranks as the nation’s fastest-growing large city with annual growth of 22,000 new residents.
With a strong combination of job growth and population growth, the outlook for San Antonio’s retail market remains positive for the foreseeable future.