If you’re looking for new commercial development in San Antonio, you may be hard pressed to find any. The commercial real estate market in San Antonio, like nearly every other large city in the country, is at a virtual standstill. That is, unless you look at medical office construction.
San Antonio office space is no longer at a premium, like it was just a few years ago. Because of the effects of the national recession and housing crisis, all of the San Antonio office space that was going up all around us cooled in an instant. Now, developers have backed off considerably when it comes to new San Antonio office space and, if you’re looking for San Antonio office space, you can probably find a sweet deal.
The Medical Office Space Solution in San Antonio
However, medical office space seems to be the exception to the rule when it comes to the San Antonio office space market.
In fact, according to recent data by NAI REOC San Antonio, leasing activity in and around the San Antonio area among health-related tenants has seen a considerable bump in activity. More than 50,000 square feet of medical office space has been leased during the first three months of 2010 alone – that’s nearly double the amount seen during the same time in 2009.
Higher Lease Prices in Demand
In addition to leasing out a considerable amount of San Antonio medical office space, it appears as if medical-related tenants are willing to fork over more money to be located in one of San Antonio’s high-growth areas. This fact is supported by lease prices, which jumped to $22.17 per square foot for medical office space the first half of this year; that’s 69 cents more than the average of $21.48 during the same time last year.
In addition to higher rent prices, it appears that the emerging medical hubs in San Antonio are even capable of asking for higher rent prices. San Antonio’s West Side, for example (which includes Westover Hills), is fetching $26.20 per square foot for medical office space, according to NAI REOC. An even more impressive statistic lies in the far North Side of San Antonio, where rent prices for medical office space has reached $28.18 per square foot in the first half of 2010.
Although leasing prices for San Antonio medical office space are increasing, vacancy rates are still quite high. Of the nearly 5.9 million square feet of commercial space still vacant, 19.3 percent of it represents medical office space.
In addition, several medical groups have begun consolidating, thereby increasing the overall vacancy rate for medical office space. For example, several University of Texas Medicine San Antonio physician groups have consolidated and moved out of multi-tenant offices near the South Texas Medical Center and into the new Medical Arts and Research Center, which features nearly 250,000 square feet of medical office space.
Many real estate experts note, that although vacancy rates are up in San Antonio for medical office space, the medical industry is very strong and stable, which thereby helps other areas of the real estate market.