SAN ANTONIO – (Realty News Report) – Store closings are creating vacancies in San Antonio shopping centers and that may be advantageous for retailers looking for space in 2021.
Stein Mart, Pier 1 and Sears all closed San Antonio stores last year.
“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 with regards to negotiating rental rates, terms, tenant improvements and concessions,” NAI Partners said in a year-end retail center report.
San Antonio’s retail real estate market will be fairly stable, despite the spate of store closures.
According to the Weitzman retail firm, the San Antonio retail market at year-end 2020 reported steady occupancy of 93.6 percent, down only slightly from the 94.5 percent rate posted at year-end 2019 despite the massive challenges faced by retailers and restaurateurs during the pandemic.
The occupancy rate is based on Weitzman’s review of a total San Antonio inventory of about 47.3 million SF of retail space in multi-tenant shopping centers with 25,000 SF or more.
The Weitzman report says the San Antonio retail market benefits from the city’s continued economic stability, as well as back-to-back years of healthy performance and low retail construction that have kept oversupply to a minimum. “These factors, combined with area landlords’ willingness to work with tenants, are what have enabled San Antonio to post only a smaller-than-predicted decline in overall retail occupancy.” In fact, after a weak spring and early summer, tenant activity and retail demand showed an upswing, which continued through the rest of the year.
In terms of closings, Sears shut its 150,000 SF store at South Park Mall and its outlet of about 134,000 SF at Rolling Oaks Mall. With these store closings, Sears – once the nation’s largest retailer – no longer has a presence in the market.
Other closures include Stein Mart (three box vacancies), Pier 1 (five closed stores), Gold’s Gym (three closed locations) and Tuesday Morning, with one closed location. Combined, these closings resulted in about 564,000 total SF.
Additional large vacancies will be created in 2021 when Macy’s closes its anchor stores at the Rivercenter and Rolling Oaks malls.
The closings were partially offset by new tenancy for several of the market’s existing vacant spaces. Pinstack, for example, an entertainment venue which backfilled a 52,290 SF space in a former Sears at Park North Shopping Center, awaits a location to open in 2021.
Restaurants, one of the more challenged categories due to the pandemic’s capacity restrictions, nevertheless reported steady activity, particularly in the second half of the year.
San Antonio has reported COVID-related restaurant closings, but the level remains below what was predicted by restaurant trade groups going into the pandemic. And as noted above, leasing activity continues, with notable demand coming from local and regional concepts.
“The outlook for the San Antonio retail market in 2021 is continued stability, especially if the promised curtailment of the COVID-19 virus occurs due to the distribution of the new vaccines,” the Weitzman report says. “However, if effects of the pandemic linger in 2021, occupancy may decline further if tenants granted deferred rents in 2020 prove unable to pay in 2021.”
“With 2021 promising a greater re-opening of the economy, we expect the current year to be one of recovery, with a return to the pre-pandemic economic health 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