Gas and oil extraction fueling commercial real estate in San Antonio

It's been a strong year for commercial real estate in San Antonio.

Similar to the San Antonio housing market, heavy demand for space – in this case, industrial, retail and office space – has led to tight inventory in the commercial sector.

Activity for the extraction of gas and oil in the Eagle Ford Shale, a rock formation covering much of Southern Texas, has provided the biggest gain for the commercial industry, according to data from real estate firm NAI REOC San Antonio.

"Yes, there is demand coming from the Eagle Ford Shale companies, but there's a general increase in demand across the board," Hank Pruitt of commercial real estate firm Pruitt Realty told My San Antonio. "People were so cautions that the demand has been suppressed for quite some time. But that's changing."

Space is dwindling in the industrial, retail and office markets as tenants are leasing more space in the second quarter compared to the first three months of 2013. It was the ninth straight quarter of gains for the amount of space occupied. The industrial sector has notched more than 850,000-square-feet so far in 2013.

"Generally, it's fairly active out there," said Seth Prescott, a vice president at Stream Realty Partners San Antonio. "A lot of it is lateral movement, but we're going in the right direction."

During the second quarter, the San Antonio vacancy rate dropped to 8.1 percent, down nearly two points year-to-year. The price for rental rates jumped nearly $2 per-square-foot over that same time frame, hitting $7.51 per-square-foot.

The market for available office space had vacancy rates drop to 18.6 percent, which was the fourth consecutive quarter for decreases in vacancies. The sector has now occupied an additional 240,000-square-feet this year.

"We've been able to successfully backfill large vacant spaces, and we haven't had any new construction to offset any of the gains," said Kim Gatley, a vice president with NAI REOC San Antonio.

Gatley said that as long as the economy holds up, she believes the commercial real estate market will continue to grow.

"Again, it's going to be more of this steady, incremental growth that we've been seeing," Gatley said. "I'm not expecting anything dramatic through the end of the year."

Google signs on in San Antonio
In one of the biggest commercial real estate signings of the year, search engine juggernaut Google will start operations in a 500,000-square-foot space in what was formerly Mayfield Mall. The campus is now known as San Antonio Station.

Disclaimer: All data and information provided on this site is for informational purposes only. makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, opinions or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.