SAN ANTONIO – (Realty News Report) – Store closures have opened up space in San Antonio shopping centers, creating opportunities for retailers seeking locations in 2021.
Last year San Antonio lost local stores from Stein Mart, Pier 1 and Sears.
“Rent growth has varied across San Antonio submarkets, and with additional space likely coming available in San Antonio, tenants may have more leverage than at any time in the last decade when negotiating rental rates, lease terms, tenant improvements and concessions,” NAI Partners said in its year-end retail center report.
Despite the wave of closures, San Antonio’s retail real estate market is expected to remain relatively stable.
According to Weitzman, the San Antonio retail market ended 2020 with a steady occupancy rate of 93.6 percent, a slight decline from 94.5 percent at the end of 2019, even after the severe challenges retailers and restaurants faced during the pandemic.
Weitzman’s occupancy calculation is based on an inventory of about 47.3 million square feet of retail space in multi-tenant shopping centers of 25,000 square feet or more.
The report notes that San Antonio benefits from continued economic stability, two consecutive years of healthy retail performance and low levels of new retail construction, which have minimized oversupply. “These factors, combined with landlords’ willingness to work with tenants, are why San Antonio experienced only a smaller-than-expected drop in overall retail occupancy.” After a weak spring and early summer, leasing activity and tenant demand picked up and improved through the remainder of the year.
Among the notable closures, Sears shut its 150,000-square-foot store at South Park Mall and its roughly 134,000-square-foot location at Rolling Oaks Mall. With those departures, Sears, once the nation’s largest retailer, no longer maintains a presence in the San Antonio market.
Other departures included Stein Mart (three large vacancies), Pier 1 (five closed stores), Gold’s Gym (three locations) and Tuesday Morning (one closed store). Together these closures accounted for about 564,000 square feet of vacant space.
More large vacancies are expected in 2021 when Macy’s closes its anchor stores at the Rivercenter and Rolling Oaks malls.
Some of the vacancies have already been offset by new tenants. For example, Pinstack, an entertainment concept, signed for a 52,290-square-foot space that previously housed Sears at Park North Shopping Center and planned to open in 2021.
Restaurants, one of the most affected categories because of pandemic-related capacity restrictions, still showed steady activity, particularly in the second half of 2020.
San Antonio experienced COVID-related restaurant closures, but the total remained below early projections from restaurant trade groups. Leasing interest persisted, with notable demand coming from local and regional operators.
“The outlook for the San Antonio retail market in 2021 is continued stability, especially if the spread of COVID-19 is curtailed through vaccine distribution,” Weitzman said. “However, if pandemic effects linger, occupancy could decline further if tenants who received rent deferrals in 2020 are unable to resume payments in 2021.”
“With 2021 expected to bring a wider reopening of the economy, we anticipate recovery during the year and a return to pre-pandemic economic conditions by 2022.”
Feb. 8, 2021 Realty News Report Copyright 2021
File: San Antonio Retail Centers to Backfill Vacancies
Caption: The Pearl redevelopment in San Antonio. 2021 Copyright photo by Ralph Bivins, Realty News Report