San Antonio’s rising office market has often been attributed to new developments in the northwestern submarket, but there’s another pocket of the city that — despite significant rent gains — has gone largely unnoticed. The northeast.
According to JLL’s latest office insight report, rents in the bypassed area have risen by nearly $5 per square foot over the past three years, going from an average $19.26 per square foot back in 2012 up to $24.24 for the third quarter of this year. That increase has boosted the submarket from the fourth to the second most expensive office area in the city, with the far north central commanding first place.
But beyond average rents, Northeast San Antonio has also experienced the most rent growth between the fourth quarter of 2012 and this year’s third quarter period.
Prices in the area posted a 25.9 percent increase between that three-year span, the largest jump in the city. Comparably, Northwest San Antonio saw rents grow by 19.4 percent, the north central submarket posted a 12.6 percent jump and downtown had a 9.1 percent increase.
Even so, a majority of the city’s new office supply has kept a northwestern focus. Three new projects delivered in the third quarter this year were built in the northwest quadrant, including R.L. Worth & Associates’ 54,000-square-foot RidgeWood Business Center II and two Stream Realty Partners developments, including the 127,000-square-foot Lockhill Crossing and the 101,000-square-foot One51 Office Centre.
Just yesterday I reported that Lennar Homes signed a lease for more than 15,000 square feet in the RidgeWood Business Center. R.L. Worth Company Vice President of Leasing Shawn Gulley said that the center, which is now fully complete, has reached 84 percent occupancy in about a year, demonstrating that there is still plenty of tenant demand in the far north central submarket of the city.
As the year progresses, other developments nearing completion will remain concentrated in the northwest, north central and far north central areas of the city. Those include the 129,000-square-foot WestRidge Two at La Cantera, the 109,000-square-foot Heritage Oaks III as well as the 147,000-square-foot Ridgewood Plaza II.
By the end of 2015, JLL is expecting to add about 1.2 million square feet of office product to San Antonio’s inventory, none of which will be in the northeast portion of the city.
But as rents continue to climb and the corridor between San Antonio and Austin strengthens, it’s safe to say that is likely to change.
By: Katie Burke
SOURCE: San Antonio Business Journal