San Antonio’s Retail Market Remains Tight
EXECUTIVE SUMMARY
San Antonio’s retail market remains tight, with positive fundamentals, including lower vacancy and increased absorption. Vacancy inched down 10 basis points, and positive net absorption increased 384% over the quarter to 396,004 sq. ft., pushing the year-end total to 760,804 sq. ft. Leasing activity for Q4 2025 totaled 570,666 sq. ft., a 9.8% quarterly decrease and a 3.1% annual decrease, but still a fair amount for the market.
Deliveries and construction activity slowed over the quarter, with deliveries down 45.2% and the under-construction pipeline decreased 20% to 1.2 million sq. ft. Average rental rates rose 1.1% quarter-over-quarter and 0.6% year-over-year, settling at $19.38 per sq. ft. (NNN), well above the historic average. Investment activity increased, with 486 properties sold over the past year, averaging $195 per sq. ft. and a cap rate of 7.0%. Low vacancy reinforces the landlord-favorable dynamics in the market. San Antonio’s retail market remains healthy and is poised for sustained growth and continued investor interest.
SUPPLY & DEMAND
KEY MARKET INDICATORS
MARKET OVERVIEW
San Antonio Economic Update
According to the U.S. Bureau of Labor Statistics, the San Antonio unemployment rate increased from 4.1% in August 2025 to 4.2% in September 2025. The unemployment rate in Texas jumped from 4.1% to 4.4% over the same period. San Antonio added 24,200 jobs between September 2024 and September 2025, a 1.8% change. Sectors with the largest annual gains included Education and Health Services at 6.2%, the Trade, Transportation, and Utilities sector at 2.5%, and the Total Private sector at 2.2%. The sector with the highest job losses over the year was the Information sector at -3.5%.
Leasing Activity Slows
Leasing activity slowed somewhat in Q4, down 9.8% quarter over quarter to 570,666 sq. ft. This was down 3.1% from Q4 2024. Notable leases recently signed include TruFit, signing a 34,000 sq. ft. lease at Lockhill Village Shopping Center; Goodwill, which signed a 14,000 sq. ft. lease at 6363 Rittiman Rd.; and Bargains Depot, which signed a 10,000 sq. ft. lease at Nacon Plaza II.
Net Absorption Sharply Increases
Net Absorption increased by 384% over the quarter and by 451% annually to 396,004 sq. ft. Notable move-ins during the fourth quarter include Dollar Tree taking 12,000 sq. ft. at 11658 N Pan Am Expressway, Terry Black’s BBQ moving into 12,000 sq. ft. in the Common Market shopping center, and Aqua-Tota Swimming School moving into 10,000 sq. ft. at 21206 TPC Parkway.
Vacancy Inches Down
The overall vacancy rate in San Antonio’s Retail market is 4.2%, down 10 basis points from Q3. Like most major Retail markets nationwide, vacancy is near record lows. Further, deliveries and the construction pipeline are down, leaving retail tenants looking to expand with limited options. San Antonio’s vacancy rate has remained under 5% since mid-2021.
Deliveries and Construction Pipeline Down Quarterly
New deliveries for Q4 2025 were down 45.2% quarter over quarter, totaling 235,656 sq. ft., but up 187% year over year. There is currently 1.2 million sq. ft. in the construction pipeline, down 20% quarter over quarter and 13.4% annually. The lack of new supply, along with a decline in future deliveries, is expected to constrain tenants looking to expand into the market.
Investment Sales Trends
CoStar Capital Market Analytics reports that the cumulative 12-month sales volume at the end of the third quarter in the San Antonio retail market was $468 million, a sharp increase from the third quarter’s 12-month volume of $122 million. With 457 deals completed, the average transaction price is $195 per sq. ft., and the average capitalization rate is 7.0%. Notable sale transactions in Q4 2025 include Blackstone Inc.’s acquisition of a 27-property portfolio, which included a Lowe’s and an H-E-B located at 1130-1150 N Loop 1604 W. Global Fund Investors was the seller. The price was not disclosed. Also, JBL Asset Management, LLC sold the 3-property, 169,000 sq. ft. Thousand Oaks Shopping Center to Sterling Organization for an undisclosed amount. And Dhanani Private Equity Group acquired Park North Shopping Center for $115 million.
Rental Rates Increase
The average monthly rental rate (NNN) for San Antonio’s retail market increased 1.1% quarterly and 0.6% annually to $19.38 per sq. ft. ft. The highest average asking rental rate is $32.36 per sq. ft. in the CBD submarket, while the lowest asking rate is $16.07 per sq. ft. in the South submarket. With vacancy rates and inventory low, rates could continue to rise.
For More Information, Contact:
Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]
