TEXAS SNAPSHOT, MARCH 2006

San Antonio Industrial Market

Art Gonzalez, Providence CRES, Inc./CORFAC International

The south side of San Antonio is expected to see activity due to the new, approximately 1.5 million-square-foot Toyota truck manufacturing plant being developed on 2,000 acres at the intersection of Applewhite and Watson roads. “The Toyota truck manufacturing plant will assist in the development of the city's south and southwest areas,” Gonzalez says. “These areas, which traditionally have been slow to attract development, are being watched closely today by developers and investors.”

The majority of industrial development in San Antonio is taking place on the IH-35 Corridor in the city of Schertz, Gonzalez says. “The reason for the vast majority of development taking place is the friendly city government with an aggressive pro-business attitude,” he says.

Developers, both old and new, are looking at industrial opportunities in San Antonio. Verde Realty, a new face in town, has joined forces with industrial developer Robert Hunt. “They have purchased more than 130 acres of industrial land in the city of Schertz fronting IH-35 and are beginning to put in the infrastructure to commence industrial building development,” Gonzalez says. In addition, Cross & Company (principals Ed Cross and David Adelman have been long-time owners of industrial buildings in San Antonio) have started an aggressive development program of Class A industrial buildings.

While the San Antonio market would love to attract more high-tech and manufacturing jobs, in reality, most of the absorption in the industrial market is in the bulk distribution and tech/flex space, according to Gonzalez. “The overall size of the San Antonio industrial market is approximately 78.16 million square feet with a 9 percent vacancy factor,” he says. “Absorption is evenly spread among many tenants.”

“In the near future, the south/southwest market merits attention because the full effect of the Toyota plant in the area has not been felt,” Gonzalez says. “The plant is still under construction and will not begin assembling trucks until late this summer or fall.”

Although the vacancy rate for multi-tenant distribution properties is near 15 percent, the market for this type of property is still very healthy in San Antonio, according to Gonzalez. “The vast majority of the vacancies are in older, functionally obsolete properties,” he says. “Developers like ProLogis, Verde Realty, Trammell Crow Company and Cross & Company will continue to develop and build new buildings this year.”

— Art Gonzalez is a principal with San Antonio-based Providence CRES, Inc./CORFAC International.

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