TEXAS SNAPSHOT, OCTOBER 2005

San Antonio Retail Market

During the past decade, San Antonio has enjoyed steady occupancy and construction in its retail market. With a new mall, high-end department stores and new retailers, the city is seeing a lot of new activity.

“2005 will stand out as one of the market's most stellar years,” says David Nicolson, president of The Weitzman Group's San Antonio office. “It is one of the most active periods of growth ever, both in the economic front and in terms of retail real estate.”

A significant development in the retail market this year has been General Growth Properties' The Shops at La Cantera, a 1.3 million-square-foot mall that opened in September. The Shops at La Cantera boasts San Antonio's first Neiman Marcus and Nordstrom department stores, as well as new Foley's and Dillard's stores. A number of luxury retailers, such as Tiffany & Co., have opened in the mall. An AMC multiplex cinema will open in 2006.

“The mall created a new retail district at I-10 and Loop 1604,” Nicolson says. “Major mall-peripheral projects are underway.”   The Rim, a 1.5 million-square-foot lifestyle center, is being planned for the northeast corner of the intersection. The center will be anchored by Bass Pro Shops Outdoor World, the first in San Antonio, as well as a multiplex cinema and additional retail stores. The first phase of the project will open next year. The developer is Atlanta-based Thomas Enterprises.

Regal Hills, a 1 million-square-foot power center, is set for the southeast corner of the intersection. The project, scheduled for completion in 2007, will have a mix of power and lifestyle retailers and restaurants, as well as an entertainment component, according to Nicolson. Florida-based Turnberry Associates is the developer.

The majority of development in San Antonio is taking place at the I-10/Loop 1604 intersection, with three major projects underway. Residential growth in northwest San Antonio and The Shops at La Cantera have made the area the most active in San Antonio.

Cencor Realty Services is developing Culebra Market Phase III, located at the southeast corner of Loop 1604 and Culebra Road. This phase will include 72,000 square feet of retail, including Hobby Lobby and Chili's. The Home Depot is planning to open a store in the area.

Park North, the redevelopment project of the old Central Park Mall, has plans for more than 1 million square feet of space for department and discount stores. The project will be located at Loop 410 between Blanco Road and San Pedro Avenue.

City-Base Landing will open this fall at the intersection of Southeast Military and Goliad and will feature a Wal-Mart Supercenter and an Office Depot. H-E-B, San Antonio's Number 1 grocer, will open a 150,000-square-foot store, the largest in the area, on South Zarzamora. Westover Marketplace, slated to open its first phase this fall, will feature a 48,000-square-foot Sportsman's Warehouse at Loop 410 and SH 151. Other anchors include Target, Ross Dress For Less, PetsMart and OfficeMax. At Loop 1604 and Highway 281, a mixed-use project, Legacy, is under construction. The first phase will open this fall, with a Life Time Fitness opening in winter 2005.

Active retail developers in the area include General Growth, David Berndt Interests, Hill-Granados Retail Partners, Turnberry Associates, Cencor Realty Services and Thomas Enterprises. New retailers to the market include Neiman Marcus, Nordstrom, Tiffany & Co., Bass Pro Shops, Gander Mountain Sports, Golf Galaxy, Rooms To Go and Life Time Fitness.

“As of mid-year 2005, San Antonio's retail market reports an occupancy rate of 89 percent,” Nicolson says. “The occupancy rate should increase during 2005 and is based on a retail market inventory of approximately 32 million square feet.”

Northwest San Antonio looks to be the most active submarket, thanks to projects like The Shops at La Cantera and The Rim. Increasing residential density and a concentration of retail space has contributed to the activity.

The Highway 281 corridor north of Loop 1604 will be another active corridor, thanks to growing residential density and excellent visibility and access.

Population and job growth are supporting San Antonio's growing retail market. Approximately 15,000 new jobs were added in 2004. For 2005, job growth is expected to rise 2.5 percent. “From 1999 to 2004, San Antonio grew approximately 1.9 percent annually, reaching more than 1.7 million people in 2004,” Nicolson says.

The 2006 opening of an $800 million Toyota truck plant will add to up to 2,000 new jobs, while Washington Mutual plans to employ a minimum of 3,000 people over the next 7 years when it brings a major operations center to San Antonio. The National Security Agency is also opening its regional headquarters in San Antonio this year.

“The next few years should be some of the brightest in San Antonio's history,” Nicolson says. “Growing employment, a vibrant tourism industry and an active residential market point to continued strength in the retail market.”

©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.