San Antonio Office Insight and Statistics...Q1 2018 San Antonio Office Insight Following a flat fourth quarter to round out 2017, the first quarter of 2018 arrived with a similar tone

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Q1 2018

San Antonio

Office Insight

Following a flat fourth quarter to round out 2017, the first quarter of 2018 arrived with a similar tone. Sluggish leasing activity experienced at the end of 2017 resulted in negative absorption to start the year, with the overall vacancy rate increasing 50 basis points. This lull in activity, in tandem with over 600,000 square feet of new product delivered to the market in 2017 were two of the major factors. Absorption numbers for the first quarter of 2018 saw tenants vacate 72,323 square feet more space than was occupied. While leasing was down, tenant requirements appeared to increase in the first quarter compared to the end of 2017. Signs such as this point towards a positive outlook for the coming quarters.

In spite of the setbacks to San Antonio’s vacancy and absorption numbers, there were positives that could be taken from the quarter. The average asking rental rate steadily increased for the 8th consecutive quarter. Expect rental rates to continue their gradual increase with potential to ramp up late in 2018 with the deliveries of new Class A construction. While absorption market wide was negative, the CBD submarket posted nearly 23,000 SF square feet of positive net absorption.

OutlookAs San Antonio’s suburban markets struggle to gain traction, the recently found momentum enjoyed in downtown continued at the start of 2018. With skyline altering projects like Frost Tower well underway and proposed projects on Lower Broadway down to HemisFair Park looking more like reality than concept, expect the momentum of downtown to accelerate even further.

Fundamentals Forecast

YTD net absorption -72,323 s.f. ▼Under construction 1,395,283 s.f. ▲Total vacancy 15.3% ▶Average asking rent (gross) $23.07 p.s.f. ▲Concessions Rising ▲

-100,000

150,000

400,000

650,000

900,000

2015 2016 2017 Q1 2018

Supply and demand (s.f.) Net absorptionDeliveries

Slow end to 2017 continues into 2018

15.0%

13.8%

14.8%

15.3%

2015 2016 2017 Q1 2018

Total vacancy

$15.00

$20.00

$25.00

$30.00

2015 2016 2017 Q1 2018

Average asking rents ($/s.f.) Class AClass B

For more information, contact: Kyle Mueller | [email protected]

• Slow leasing activity to end 2017 results in negative absorption to start 2018.

• Despite a slow start to 2018, average rental rates continue to climb.• CBD shines as suburbs slow.

San Antonio

Q1 2018

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (%)

Total

vacancy (%)

Average

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)CBD Totals 4,929,073 21,780 21,780 0.4% 14.6% 14.6% $23.77 0 567,987Downtown Totals 4,929,073 21,780 21,780 0.4% 14.6% 14.6% $23.77 0 567,987

Far North Central Totals 2,054,869 8,730 8,730 0.4% 8.8% 11.2% $30.43 0 0Far Northwest Totals 823,594 -995 -995 -0.1% 15.0% 15.0% $34.91 0 66,900Far West Totals 649,052 0 0 0.0% 37.9% 37.9% $26.33 0 0Midtown Totals 1,542,141 -953 -953 -0.1% 8.3% 8.6% $28.08 0 350,000New Braunfels Totals 325,878 9,570 9,570 2.9% 13.9% 13.9% $23.83 0 59,750North Central Totals 8,440,715 3,755 3,755 0.0% 15.2% 15.6% $24.18 0 77,415Northeast Totals 2,144,817 -12,362 -12,362 -0.6% 20.1% 20.4% $19.36 0 0Northwest Totals 9,252,312 -101,848 -101,848 -1.1% 14.8% 15.5% $22.59 0 183,231South Totals 921,571 0 0 0.0% 8.0% 8.2% $18.70 0 90,000Suburban Totals 26,154,949 -94,103 -94,103 -0.4% 14.9% 15.4% $22.94 0 827,296San Antonio Totals 31,084,022 -72,323 -72,323 -0.2% 14.8% 15.3% $23.07 0 1,395,283

CBD A 1,947,721 14,121 14,121 0.7% 12.2% 12.2% $27.25 0 462,000Downtown A 1,947,721 14,121 14,121 0.7% 12.2% 12.2% $27.25 0 462,000

Far North Central A 1,178,858 -14,100 -14,100 -1.2% 9.7% 13.4% $32.38 0 0Far Northwest A 648,774 -995 -995 -0.2% 15.3% 15.3% $37.33 0 0Far West A 298,170 0 0 0.0% 70.2% 70.2% $27.00 0 0Midtown A 989,793 451 451 0.0% 5.0% 5.5% $32.42 0 350,000North Central A 2,863,909 -10,358 -10,358 -0.4% 16.4% 16.6% $28.51 0 0

Northeast A 290,467 2,078 2,078 0.7% 7.7% 9.6% $26.50 0 0Northwest A 1,924,324 -50,776 -50,776 -2.6% 19.4% 20.7% $30.22 0 0Suburban A 8,194,295 -73,700 -73,700 -0.9% 16.3% 17.3% $29.85 0 350,000San Antonio A 10,142,016 -59,579 -59,579 -0.6% 15.5% 16.4% $29.46 0 812,000

CBD B 2,481,427 19,370 19,370 0.8% 17.8% 17.8% $21.90 0 105,987Downtown B 2,481,427 19,370 19,370 0.8% 17.8% 17.8% $21.90 0 105,987

Far North Central B 876,011 22,830 22,830 2.6% 7.7% 8.2% $27.13 0 0

Far Northwest B 174,820 0 0 0.0% 13.8% 13.8% $25.00 0 66,900

Far West B 350,882 0 0 0.0% 10.4% 10.4% $22.50 0 0

Midtown B 552,348 -1,404 -1,404 -0.3% 14.3% 14.3% $25.35 0 0New Braunfels B 325,878 9,570 9,570 2.9% 13.9% 13.9% $23.83 0 59,750

North Central B 4,904,321 17,859 17,859 0.4% 15.0% 15.5% $21.95 0 77,415

Northeast B 949,593 3,604 3,604 0.4% 15.8% 15.8% $19.82 0 0

Northwest B 5,896,731 -36,160 -36,160 -0.6% 12.8% 13.3% $20.43 0 183,231

South B 627,656 0 0 0.0% 9.3% 9.6% $18.75 0 90,000Suburban B 14,658,240 16,299 16,299 0.1% 13.3% 13.7% $21.51 0 477,296San Antonio B 17,139,667 35,669 35,669 0.2% 13.9% 14.3% $21.58 0 583,283

Downtown C 499,925 -11,711 -11,711 -2.3% 8.2% 8.2% $24.00 0 0Downtown C 499,925 -11,711 -11,711 -2.3% 8.2% 8.2% $24.00 0 0

North Central C 672,485 -3,746 -3,746 -0.6% 11.8% 11.8% $19.18 0 0Northeast C 904,757 -18,044 -18,044 -2.0% 28.6% 28.6% $18.48 0 0Northwest C 1,431,257 -14,912 -14,912 -1.0% 17.2% 17.3% $17.61 0 0South C 293,915 0 0 0.0% 5.2% 5.2% $18.50 0 0Suburban C 3,302,414 -36,702 -36,702 -1.1% 18.2% 18.2% $18.22 0 0San Antonio C 3,802,339 -48,413 -48,413 -1.3% 16.9% 16.9% $18.59 0 0

9601 McAllister Fwy, San Antonio, TX 78216 | tel +1 210 839 2033Kyle Mueller | Research Analyst


Q4 2017

San Antonio

Office Insight

Following a steady first half of 2017 and a sub-par third quarter, the fourth quarter delivered a lackluster performance to round out the year, remaining flat in most measurable indicators. Vacancy corrected over the quarter, decreasing 10 basis points after new deliveries earlier in the year pushed vacancy rates upward. Traditionally stable markets, such as the North Central submarket realized a hit in the fourth quarter with nearly 100,000 square feet of negative absorption reported. As a result of this, buildings with large blocks of available space are having to offer greater concessions as well as settle for rental rates below quoted rates.

High-end, speculative office development continues to be the buzz in San Antonio, with another major project being announced in the fourth quarter of 2017. The project, located on Lower Broadway, being developed by Hixon Properties in partnership with the Cavender Family, will be a cross-laminated timber building, the first of it’s kind in the state of Texas.

OutlookThe pressing question moving into 2018 will be, how will the new projects on Lower Broadway and the CBD impact the rest of the market leading up to their delivery. Up to this point almost all of the activity has only been rumored, but as 2018 progresses, expect to see large tenants begin to sign leases, continuing the trend of flight to quality. In addition to large tenants in the market upgrading their spaces, it is expected that this new product could lure some new tenants to the market. The silver lining for the existing buildings is that the rates buildings will demand will far exceed existing Class A rates, this discrepancy will enable buildings once considered top of the market to be viewed as lower cost alternatives and in some cases push rates.

Fundamentals Forecast

YTD net absorption 179,487 s.f. ▲Under construction 1,317,868 s.f. ▲Total vacancy 14.8% ▼Average asking rent (gross) $23.09 p.s.f. ▲Concessions Rising ▲

0

500,000

1,000,000

2013 2014 2015 2016 2017


After a flat fourth quarter, 2018 arrives with optimism

15.6%

14.7%15.0%

13.8%

14.8%

2013 2014 2015 2016 2017

Total vacancy

$10.00

$15.00

$20.00

$25.00

$30.00

2013 2014 2015 2016 2017

Average asking rents ($/s.f.) Class A

Class B

For more information, contact: Kyle Mueller| [email protected]

• Fourth quarter absorption remained relatively flat• Traditionally strong submarkets felt the squeeze in the fourth quarter,

resulting in higher concessions and lower rental rates• Increased supply of new Class A product will begin to show its impacts in

2018

San Antonio

Q4 2017

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (%)

Total

vacancy (%)

Average

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)CBD Totals 4,764,073 57,362 127,225 2.7% 14.0% 14.2% $22.96 0 567,987Downtown Totals 4,764,073 57,362 127,225 2.7% 14.0% 14.2% $22.96 0 567,987

Far North Central Totals 2,055,869 -12,531 61,828 3.0% 10.0% 12.4% $30.18 0 0Far Northwest Totals 823,594 17,424 -44,417 -5.4% 14.9% 14.9% $34.06 52,796 66,900Far West Totals 647,945 0 37,047 5.7% 38.0% 38.0% $26.82 101,401 0Midtown Totals 1,530,745 2,192 -55,277 -3.6% 8.3% 8.6% $27.68 0 350,000New Braunfels Totals 325,878 20,000 24,962 7.7% 19.2% 19.2% $22.17 0 0North Central Totals 8,436,361 -95,139 -211,170 -2.5% 15.9% 16.3% $24.12 0 0Northeast Totals 2,144,817 -133,850 -86,154 -4.0% 19.5% 19.9% $19.40 22,299 0Northwest Totals 9,203,904 42,694 336,365 3.7% 12.4% 12.9% $22.80 445,329 183,231South Totals 921,571 85,344 -10,922 -1.2% 7.9% 7.9% $20.97 0 90,000Suburban Totals 26,090,684 -73,866 52,262 0.2% 14.3% 14.9% $23.11 621,825 690,131San Antonio Totals 30,854,757 -16,504 179,487 0.6% 14.3% 14.8% $23.09 621,825 1,258,118

CBD A 1,937,221 49,616 52,619 2.7% 11.2% 11.2% $25.65 0 462,000Downtown A 1,937,221 49,616 52,619 2.7% 11.2% 11.2% $25.65 0 462,000

Far North Central A 1,178,858 8,667 59,269 5.0% 9.4% 13.0% $32.43 0 0Far Northwest A 616,355 16,429 -53,729 -8.7% 14.1% 14.1% $35.50 0 0Far West A 297,063 0 15,350 5.2% 70.5% 70.5% $27.75 0 0Midtown A 989,793 -11,273 -21,452 -2.2% 5.1% 5.5% $35.38 0 350,000North Central A 2,863,909 6,523 -21,115 -0.7% 16.1% 16.4% $28.38 0 0

Northeast A 290,467 -7,150 7,938 2.7% 7.7% 10.3% $26.50 22,299 0Northwest A 1,924,324 7,728 179,009 9.3% 18.0% 18.4% $30.21 318,353 0Suburban A 8,160,769 20,924 165,270 2.0% 15.8% 16.7% $29.84 340,652 350,000San Antonio A 10,097,990 70,540 217,889 2.2% 14.9% 15.6% $29.23 340,652 812,000

CBD B 2,326,927 7,746 63,484 2.7% 18.1% 18.4% $21.58 0 105,987Downtown B 2,326,927 7,746 63,484 2.7% 18.1% 18.4% $21.58 0 105,987

Far North Central B 850,154 -21,399 2,559 0.3% 11.3% 11.8% $27.59 0 0

Far Northwest B 207,239 995 9,312 4.5% 17.0% 17.0% $30.50 52,796 66,900

Far West B 350,882 0 21,697 6.2% 10.4% 10.4% $21.50 101,401 0

Midtown B 540,952 13,465 -33,825 -6.3% 14.3% 14.3% $22.70 0 0New Braunfels B 325,878 20,000 24,962 7.7% 19.2% 19.2% $22.17 0 0

North Central B 4,899,995 -99,540 -171,273 -3.5% 16.7% 17.2% $22.13 0 0

Northeast B 949,593 -32,995 -36,043 -3.8% 16.3% 16.3% $19.82 0 0

Northwest B 5,848,288 35,367 136,298 2.3% 9.6% 10.2% $20.65 126,976 183,231

South B 627,656 59,560 -13,514 -2.2% 9.2% 9.2% $21.50 0 90,000Suburban B 14,600,637 -24,547 -59,827 -0.4% 13.0% 13.5% $21.93 281,173 340,131San Antonio B 16,927,564 -16,801 3,657 0.0% 13.7% 14.1% $21.87 281,173 446,118

Downtown C 499,925 0 11,122 2.2% 5.9% 5.9% $17.89 0 0Downtown C 499,925 0 11,122 2.2% 5.9% 5.9% $17.89 0 0

Far North Central C 26,857 201 0 0.0% 0.0% 0.0% $24.00 0 0North Central C 672,457 -2,122 -18,782 -2.8% 9.4% 9.4% $18.80 0 0

Northeast C 904,757 -93,705 -58,049 -6.4% 26.7% 26.7% $18.48 0 0Northwest C 1,431,292 -401 21,058 1.5% 16.2% 16.4% $16.93 0 0South C 293,915 25,784 2,592 0.9% 5.2% 5.2% $19.00 0 0Suburban C 3,329,278 -70,243 -53,181 -1.6% 16.6% 16.6% $17.88 0 0San Antonio C 3,829,203 -70,243 -42,059 -1.1% 15.2% 15.2% $17.88 0 0

9601 McAllister Fwy, San Antonio, TX 78216 | tel +1 210 839 2033

Kyle Mueller | Research Analyst


Q3 2017

San AntonioOffice Insight

Through the first half of 2017, the San Antonio office market was characteristically stable, experiencing moderate absorption. However, the third quarter experienced a slight slowdown in activity with negative absorption for the first time since the second quarter of 2015. In addition to the decrease in absorption, market wide vacancy rates experienced a significant jump over the quarter, increasing 80 basis points. This jump should not be cause for concern, as a large driver of this increase in vacancy can be attributed to the delivery of several new projects delivered during the quarter summing 257,484 square feet. These completions bring the year to date total to 621,825 square feet of new product delivered, most of which has been delivered to the market vacant, or with little preleasing activity.

Tenants such as The Methodist Healthcare System of San Antonio, who signed a full floor lease at the recently completed Landmark One office building, continue to prove they are willing to pay the higher rental rates associated with the construction of new, class A buildings. As rates continue to rise, buildings that once had the highest rental rates in the market will appear to be much more affordable options.

Outlook

Record construction continues in San Antonio, with over 1.2 million square feet currently underway. Due to high demand for this new product in highly desirable locations, landlords will likely regain some leverage as tenants compete for limited supply. Projects under construction such as Frost Tower and the Offices at the Pearl will command rental rates well above what is considered top of the market today.

Fundamentals ForecastYTD net absorption 177,175 s.f. ▲Under construction 1,258,118 s.f. ▲Total vacancy 14.9% ▼Average asking rent (gross) $22.91 p.s.f. ▲Concessions Rising ▲

0

500,000

1,000,000

2013 2014 2015 2016 YTD2017


Tenant interest in new construction remains strong despite all-time high rental rates

15.6%

14.7%15.0%

13.8%

14.9%

2013 2014 2015 2016 2017

Total vacancy

$10.00

$15.00

$20.00

$25.00

$30.00

2013 2014 2015 2016 2017

Average asking rents ($/s.f.) Class A

Class B

For more information, contact: Kyle Mueller| [email protected]

• Tenants validate the construction of new, class A buildings with strong interest and leasing activity.

• Vacancies experienced an uptick in the quarter, much of this change can be explained by the large volume of new deliveries in 2017.

• Rental rates continue to creep upwards impacting average rental rates.

San Antonio

Q3 2017

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (%)

Total

vacancy (%)

Average

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)CBD Totals 4,705,459 -70,548 62,474 1.3% 16.1% 16.3% $21.18 0 567,987Downtown Totals 4,705,459 -70,548 62,474 1.3% 16.1% 16.3% $21.18 0 567,987

Far North Central Totals 2,055,869 8,841 56,376 2.7% 10.1% 12.4% $29.52 0 0Far Northwest Totals 823,593 8,327 -56,723 -6.9% 16.7% 16.7% $35.15 52,796 66,900Far West Totals 647,945 -10,650 37,047 5.7% 38.0% 38.0% $26.64 101,401 0Midtown Totals 1,383,117 14,161 -57,471 -4.2% 9.3% 9.6% $25.88 0 350,000New Braunfels Totals 325,878 -196 4,962 1.5% 25.3% 25.3% $22.83 0 0North Central Totals 8,392,878 -35,420 -115,089 -1.4% 14.5% 14.9% $23.49 0 0Northeast Totals 2,047,427 14,161 47,696 2.3% 13.5% 13.8% $19.62 22,299 0Northwest Totals 9,199,585 85,541 294,169 3.2% 12.8% 13.4% $23.63 445,329 183,231South Totals 921,571 846 -96,266 -10.4% 17.2% 17.2% $20.72 0 90,000Suburban Totals 25,797,863 42,335 114,701 0.4% 14.1% 14.6% $23.27 621,825 690,131San Antonio Totals 30,503,322 -28,213 177,175 0.6% 14.4% 14.9% $22.91 621,825 1,258,118

CBD A 1,937,221 -48,371 3,183 0.2% 13.8% 13.8% $25.40 0 462,000Downtown A 1,937,221 -48,371 3,183 0.2% 13.8% 13.8% $25.40 0 462,000

Far North Central A 1,178,858 -7,922 32,734 2.8% 11.6% 15.3% $30.91 0 0Far Northwest A 616,354 0 -65,040 -10.6% 15.9% 15.9% $37.00 0 0Far West A 297,063 13,588 15,350 5.2% 70.5% 70.5% $27.25 0 0Midtown A 898,648 -15,249 -10,179 -1.1% 4.2% 4.7% $34.44 0 350,000North Central A 3,027,743 -18,682 -27,199 -0.9% 18.1% 18.2% $26.53 0 0

Northeast A 290,467 -5,638 15,088 5.2% 5.2% 7.8% $26.52 22,299 0Northwest A 1,924,324 -8,013 171,281 8.9% 18.6% 19.1% $30.70 318,353 0Suburban A 8,233,457 -41,916 132,035 1.6% 17.1% 17.9% $29.08 340,652 350,000San Antonio A 10,170,678 -90,287 135,218 1.3% 16.4% 17.1% $28.49 340,652 812,000CBD B 2,268,313 -22,177 48,169 2.1% 20.4% 20.7% $18.74 0 105,987Downtown B 2,268,313 -22,177 48,169 2.1% 20.4% 20.7% $18.74 0 105,987


Far Northwest B 207,239 8,327 8,317 4.0% 18.8% 18.8% $30.50 52,796 66,900

Far West B 350,882 -24,238 21,697 6.2% 10.4% 10.4% $23.17 101,401 0

Midtown B 484,469 -13,866 -47,292 -9.8% 18.8% 18.8% $22.34 0 0New Braunfels B 325,878 -196 4,962 1.5% 25.3% 25.3% $22.83 0 0North Central B 4,687,149 -19,307 -71,230 -1.5% 12.9% 13.6% $21.29 0 0

Northeast B 949,593 2,519 -3,048 -0.3% 12.8% 12.8% $20.43 0 0

Northwest B 5,843,969 63,784 101,329 1.7% 10.1% 10.8% $21.83 126,976 183,231

South B 627,656 846 -73,074 -11.6% 18.7% 18.7% $21.50 0 90,000Suburban B 14,326,989 34,948 -34,381 -0.2% 12.3% 12.8% $22.01 281,173 340,131San Antonio B 16,595,302 12,771 13,788 0.1% 13.4% 13.8% $21.33 281,173 446,118Downtown C 499,925 0 11,122 2.2% 5.9% 5.9% $17.89 0 0Downtown C 499,925 0 11,122 2.2% 5.9% 5.9% $17.89 0 0

Far North Central C 26,857 -316 -316 -1.2% 1.2% 1.2% $24.00 0 0

North Central C 677,986 2,569 -16,660 -2.5% 9.2% 9.2% $18.09 0 0Northeast C 807,367 17,280 35,656 4.4% 17.1% 17.1% $18.15 0 0Northwest C 1,431,292 29,770 21,559 1.5% 16.2% 16.3% $17.28 0 0South C 293,915 0 -23,192 -7.9% 14.0% 14.0% $18.50 0 0Suburban C 3,237,417 49,303 17,047 0.5% 14.6% 14.7% $17.74 0 0San Antonio C 3,737,342 49,303 28,169 0.8% 13.5% 13.5% $17.74 0 0


New Construction Rules the Day

Q2 2017

San AntonioOffice Insight

Following an underwhelming first quarter, in which citywide absorption totaled -15,361 square feet, the second quarter rebounded with a respectable second quarter that saw 140,078 square feet of office space absorbed. This positive absorption resulted in citywide vacancies being reduced from 15.1% in Q1 to 15.0% in Q2. Deliveries of new Class A buildings in the Far Northwest and Far North Central submarkets in late 2016 and Q1 2017 have caused rental rates to continue their upward trajectory, bringing the citywide average asking gross rate to $22.54 per square foot. New construction delivered in the second quarter was exclusively in the Far West submarket, with One51 Office Centre Phase II being the largest contributor, brining 101,401 square feet to the market.

The second quarter of 2017 was headlined by the 60,000 square foot HULU customer experience center selecting a location in Northwest San Antonio. This move supports the recent surge of contact centers looking at San Antonio as a city with a strong workforce, while still maintaining favorable rental rates.

OutlookThe San Antonio area is experiencing record amounts of new construction, with over 1.2 million square feet having broken ground for construction as of Q2 2017. Upon delivery of this new construction, it is expected that these buildings will set new high water marks for lease rates in the city. In addition to projects underway, there is well over 1 million square feet of proposed projects. Despite the record high asking rates, new construction is generating steady interest from tenants willing to pay the greater rates.

Fundamentals ForecastYTD net absorption 78,510 s.f. ▲Under construction 1,274,332 s.f. ▲Total vacancy 15.0% ▼Average asking rent (gross) $22.54 p.s.f. ▲Concessions Rising ▲

0

500,000

1,000,000

1,500,000

2013 2014 2015 2016 YTD2017


19.5% 18.2% 18.5%15.1% 15.0%

2013 2014 2015 2016 2017

Total vacancy

$10.00

$14.00

$18.00

$22.00

$26.00

$30.00

2013 2014 2015 2016 2017

Average asking rents ($/s.f.) Class AClass B

For more information, contact: Kyle Mueller | [email protected]

• Record construction of new office is underway, totaling 1.2 million square feet

• Asking rental rates remain steady and are expected to increase with the delivery of new product

• Continued interest from technology and contact center tenants in the market

San AntonioQ2 2017

Office Statistics

ClassInventory

(s.f.)

Total net absorption

(s.f.)

YTD total net absorption

(s.f.)

YTD total net absorption

(% of stock)

Direct vacancy (%)

Total vacancy (%)

Average asking rent ($

p.s.f.)

YTD completions

(s.f.)

Under construction

(s.f.)Downtown Totals 5,266,846 34,944 8,189 0.2% 11.9% 11.9% $22.80 0 462,000Far North Central Totals 3,094,355 15,889 37,552 1.2% 13.6% 13.7% $30.23 0 0North Central Totals 8,756,291 -14,789 -93,461 -1.1% 12.4% 12.9% $22.50 0 0Northeast Totals 1,953,421 34,252 7,570 0.4% 13.3% 13.6% $18.57 22,299 0Northwest Totals 8,730,445 55,228 38,812 0.4% 16.6% 16.9% $22.15 150,735 496,368Far Northwest Totals 1,110,221 0 11,709 1.1% 31.3% 31.3% $29.50 0 57,468Far West Totals 724,685 15,226 61,161 8.4% 3.6% 3.6% $26.45 0 101,401South Totals 557,145 -672 5,716 1.0% 13.5% 13.8% $23.48 0 90,000New Braunfels Totals 232,760 0 1,262 0.5% 36.5% 36.5% $24.10 0 0Suburban Totals 25,159,323 105,134 70,321 0.3% 14.9% 15.2% $23.69 173,034 745,237San Antonio Totals 30,426,169 140,078 78,510 0.3% 15.0% 15.3% $22.54 173,034 1,207,237

Downtown A 2,073,921 7,989 -11,941 -0.6% 11.1% 11.1% $25.69 0 462,000Far North Central A 1,788,377 -12,758 17,936 1.0% 15.0% 15.3% $32.00 0 0North Central A 3,407,578 -30,490 -52,651 -1.5% 10.3% 10.4% $27.06 0 0Northeast A 593,084 0 -3,813 -0.6% 3.0% 3.9% $24.50 22,299 0Northwest A 2,542,615 -8,079 -23,512 -0.9% 16.0% 16.8% $27.43 150,735 431,320Far Northwest A 1,075,917 0 11,709 1.1% 32.3% 32.3% $29.50 0 57,468Far West A 508,808 15,226 15,226 3.0% 2.7% 2.7% $26.50 0 0Suburban A 9,916,379 -36,101 -35,105 -0.4% 14.2% 14.5% $28.68 173,034 488,788San Antonio A 11,990,300 -28,112 -47,046 -0.4% 13.6% 13.9% $28.26 173,034 950,788

Downtown B 2,398,505 21,136 27,390 1.1% 16.5% 16.5% $21.13 0 0Far North Central B 1,305,978 28,647 19,616 1.5% 11.6% 11.6% $27.09 0 0North Central B 4,450,067 16,037 -48,141 -1.1% 14.0% 14.9% $21.16 0 0Northeast B 1,075,932 23,989 1,279 0.1% 16.2% 16.2% $19.10 0 0Northwest B 5,166,576 65,927 72,825 1.4% 17.0% 17.0% $20.76 0 65,048Far Northwest B 34,304 0 0 0.0% 0.0% 0.0% $0.00 0 0Far West B 215,877 0 45,935 21.3% 5.7% 5.7% $26.40 0 101,401South B 557,145 -672 5,716 1.0% 13.5% 13.8% $23.48 0 90,000New Braunfels B 232,760 0 1,262 0.5% 36.5% 36.5% $24.10 0 0Suburban B 13,038,639 133,928 98,492 0.8% 15.3% 15.7% $25.62 0 256,449San Antonio B 15,437,144 155,064 125,882 0.8% 15.5% 15.8% $24.88 0 256,449

Downtown C 794,420 5,819 -7,260 -0.9% 25.1% 25.1% $17.89 0 0North Central C 898,646 -336 7,331 0.8% 12.1% 12.1% $15.44 0 0Northeast C 284,405 10,263 10,104 3.6% 24.1% 24.1% $15.67 0 0Northwest C 1,021,254 -2,620 -10,501 -1.0% 15.7% 16.7% $16.30 0 0Suburban C 2,204,305 7,307 6,934 0.3% 15.3% 15.7% $15.89 0 0San Antonio C 2,998,725 13,126 -326 0.0% 17.9% 18.2% $16.64 0 0

9601 McAllister Fwy, San Antonio, TX 78216 | tel +1 210 839 2033

2017 Jones Lang LaSalle IP, Inc. All rights reserved.

Kyle Mueller | Research Analyst

Office Statistics

San Antonio | Q4 2016

Class Inventory (s.f.)Total net

absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)

Downtown Totals 5,108,350 571,976 430,789 8.4% 12.8% 12.8% $21.56 0 0

Far North Central Totals 1,338,083 -10,213 55,966 4.2% 13.8% 17.0% $29.17 147,000 0

North Central Totals 7,495,679 -788 61,057 0.8% 11.6% 11.7% $24.33 48,000 22,299

Northeast Totals 3,072,171 16,525 32,970 1.1% 10.0% 10.0% $25.27 0 0Northwest Totals 9,208,553 197,614 879,715 9.6% 12.3% 12.7% $23.08 227,605 789,761South Totals 437,605 25,771 13,366 3.1% 10.6% 10.6% $23.48 0 0Suburban Totals 21,552,091 228,909 1,043,074 4.8% 11.8% 12.2% $24.22 422,605 812,060

San Antonio Totals 26,660,441 800,885 1,473,863 5.5% 12.0% 12.3% $23.68 422,605 812,060

Downtown A 1,872,154 21,365 41,813 2.2% 11.9% 11.9% $25.95 0 0

Far North Central A 521,899 -26,992 5,322 1.0% 21.7% 29.9% $30.05 147,000 0

North Central A 3,505,866 20,411 75,028 2.1% 11.8% 12.0% $26.42 48,000 22,299

Northeast A 785,543 -4,362 -9,684 -1.2% 32.1% 32.1% $26.42 0 0Northwest A 3,851,093 123,737 672,182 17.5% 12.4% 13.4% $26.23 170,605 519,761Suburban A 8,664,401 112,794 742,848 8.6% 14.5% 15.5% $26.67 365,605 542,060

San Antonio A 10,536,555 134,159 784,661 7.4% 14.1% 14.9% $26.56 365,605 542,060

Downtown B 3,236,196 550,611 388,976 12.0% 13.3% 13.3% $19.28 0 0


North Central B 3,989,813 -21,199 -13,971 -0.4% 11.4% 11.5% $22.43 0 0

Northeast B 2,286,628 20,887 42,654 1.9% 2.5% 2.5% $20.13 0 0Northwest B 5,357,460 73,877 207,533 3.9% 12.2% 12.2% $20.76 57,000 270,000South B 437,605 25,771 13,366 3.1% 10.6% 10.6% $23.48 0 0Suburban B 12,887,690 116,115 300,226 2.3% 9.9% 10.0% $21.82 57,000 270,000

San Antonio B 16,123,886 666,726 689,202 4.3% 10.6% 10.6% $21.18 57,000 270,000

1703 West Sixth, Suite 850, Austin TX 78746 tel +1 512 225 2716

Emily Hunt | Research Analyst or Christian Beaudoin | Director of Research

Square feet under construction in the Northwest submarket

Q3 2016 leasing activity by industry (leases > 20k sf)

Total vacancy by submarket

No pause in Northwest leasing and development activity

The Northwest submarket continues to lead the charge in leasing activity and

new development for the San Antonio region. Essentially all of the space that has

been absorbed across the San Antonio market this year has been in the

Northwest. Four of the top five lease transactions of Q3 were also in the

Northwest and they are evidence that the large development projects underway

could be well positioned, despite the vast amount of space that is set to be

delivered in 2017. Collectively, there are now over 728,000 square feet under

construction in San Antonio, all located in the Northwest.

Financial services dominating leasing activity

A look at the largest leases of Q3 illustrates the importance of the financial

services and insurance sector to the local real estate market. Seven of the top 10

largest leases were signed by finance, insurance, and accounting firms, and

together they represented over 462,000 square feet of expansionary leasing

activity. USAA alone was responsible for 295,000 square feet of leasing, with the

majority of their activity concentrated in the Northwest. SWBC, RSM, and UBS

also made large commitments to the market, proving San Antonio’s position as

an operations hub for finance and accounting. Beyond finance, the healthcare

sector represented substantial leasing activity as well, led by Centene in the Far

West submarket and The Center for Healthcare Services (Northwest).

A tale of two cities downtown

While the San Antonio CBD vacancy rate remains elevated at 24 percent, the

market is sharply divided among Class A and Class B product. The Class B

vacancy rate is among the highest in the nation, at 30 percent, while Class A

vacancy is now 13 percent and still falling. This gap highlights the demand for

high-quality offices, and also the challenge facing landlords with functionally

obsolete buildings. Excitement around the development of Frost Tower indicates

that interest in Trophy space is strong and downtown San Antonio may be on the

verge of the urban renewal wave that has revitalized many urban cores across

the country.

When you’re hot, you’re hot: Northwest still thriving

2,257

Office Insight


26,681,851Total inventory (s.f.)

191,784Q3 2016 net absorption (s.f.)

$22.90Direct average asking rent

728,077Total under construction (s.f.)

15.1%Total vacancy

672,978YTD net absorption (s.f.)

2.3%12-month rent growth

63.1% Total preleased

10.6%

11.7%

14.1%

16.2%

16.5%

24.0%

Northeast

North Central

Northwest

Far North Central

South

CBD

728,077 s.f.

300,000

400,000

500,000

600,000

700,000

800,000

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q3 2016

71%

29% Financial Services,Accounting

Healthcare

Current conditions – submarket Historical leasing activity (s.f.)

Source: JLL Research Source: JLL Research

Total net absorption (s.f.)

Source: JLL Research

Total vacancy rate (%)


Direct average asking rent ($ p.s.f.)


446,982

2,345,436

71,391242,177

68,109 106,594

-395,130

177,350 147,569

523,700672,978

-1000000

-500000

0

500000

1000000

1500000

2000000

2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$17.23 $17.61$18.09

$18.50

$17.07

$18.84 $19.03$19.98

$21.77 $22.12$22.98 $22.90

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016

15.7%

13.0%12.5%

15.7%

14.5% 14.7%15.3%

15.9%

15.0% 14.8%15.1%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016

2,049,3662,146,7862,455,3332,356,2232,352,670

1,226,664

806,064

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 2015 YTD2016

©2016 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Meredith Sheeder | [email protected] or [email protected]

Peaking

market

Falling

market

Bottoming

marketRising

market

Far North Central

North Central

Northeast

Northwest

Land

lord

leve

rage

Tenant leverage

South

CBD

Office Statistics



absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 5,108,350 7,885 -141,187 -2.8% 24.0% 24.0% $20.18 0 0

Far North Central Totals 1,338,083 5,031 66,179 4.9% 15.8% 16.2% $29.00 147,000 0North Central Totals 7,495,679 61,914 61,845 0.8% 11.6% 11.7% $24.52 48,000 0Northeast Totals 3,072,171 -15,514 16,445 0.5% 10.2% 10.6% $24.77 0 0Northwest Totals 9,166,963 126,095 682,101 7.4% 13.7% 14.1% $22.92 57,000 728,077South Totals 437,605 6,373 -12,405 -2.8% 16.5% 16.5% $23.29 0 0Suburban Totals 21,510,501 183,899 814,165 3.8% 12.6% 12.9% $24.13 252,000 728,077San Antonio Totals 26,618,851 191,784 672,978 2.5% 14.8% 15.1% $22.90 252,000 728,077

Downtown A 1,872,154 18,075 20,448 1.1% 13.0% 13.0% $25.96 0 0

Far North Central A 521,899 -8,075 32,314 6.2% 23.5% 24.8% $30.05 147,000 0North Central A 3,505,866 39,577 54,617 1.6% 12.6% 12.6% $26.65 48,000 0Northeast A 785,543 -7,716 -5,322 -0.7% 31.6% 31.6% $26.42 0 0Northwest A 3,809,503 85,256 548,445 14.4% 13.9% 14.8% $26.04 0 458,077Suburban A 8,622,811 109,042 630,054 7.3% 15.5% 16.0% $26.68 195,000 458,077San Antonio A 10,494,965 127,117 650,502 6.2% 15.1% 15.5% $26.57 195,000 458,077

Downtown B 3,236,196 -10,190 -161,635 -5.0% 30.3% 30.3% $18.74 0 0

Far North Central B 816,184 13,106 33,865 4.1% 10.8% 10.8% $27.52 0 0North Central B 3,989,813 22,337 7,228 0.2% 10.7% 11.0% $22.32 0 0Northeast B 2,286,628 -7,798 21,767 1.0% 2.8% 3.4% $18.47 0 0Northwest B 5,357,460 40,839 133,656 2.5% 13.6% 13.6% $20.66 57,000 270,000South B 437,605 6,373 -12,405 -2.8% 16.5% 16.5% $23.29 0 0Suburban B 12,887,690 74,857 184,111 1.4% 10.7% 10.9% $21.65 57,000 270,000San Antonio B 16,123,886 64,667 22,476 0.1% 14.6% 14.8% $20.44 57,000 270,000



Travis Rogers Research Analyst

Square feet under construction

Average asking rent by submarket


Northwest dominates with tenant demand and new development

The Northwest submarket continues to lead the charge in leasing activity and

new development for the San Antonio region. Through the first half of 2016, over

556,000 square feet of space has been absorbed in the Northwest, representing

over 6 percent of the existing inventory. This level of leasing velocity is unique in

the market and explains the rush toward new development. There are four key

properties currently under construction with others in the planning stages. Vista

Corporate Center (150,735 square feet), Security Service FCU (270,000 square

feet), 1900 NW Loop 410 (57,000 square feet) and Huntington Center (52,000

square feet) are all underway and significantly preleased. Collectively, there are

now over 785,000 square feet under construction, all located in the Northwest.

Consistent regional rent growth, and consistency across submarkets

Average gross asking rents across San Antonio have increased from $17 per

square foot to $23 per square foot since 2009, or about $1 per year. This 2.4

percent annual growth has been fairly consistent across the submarkets and the

variance between the regions is relatively small. Furthermore, the spread

between Class A and B rental rates is narrow compared to other cities. Average

asking rents hover between $20 per square foot on the low end, to $28 on the

high end, with very few exceptions. Much of the Class B office product in the

market – especially in the northern corridor – is comparable in quality and finish

to traditional Class A suburban offices.

Vacancy declining but remains high in the CBD

While the San Antonio overall vacancy rate held steady over the quarter, the

market is showing stark differences in tenant demand by submarket and building

class. For example, the vacancy rate in the Northeast is approaching single

digits, while Class B spaces downtown have a vacancy rate above 30 percent.

With over two million square feet of new construction delivered in the last two

years, tenants have options in a range of properties. As speculative

developments, such as Ridgewood Plaza deliver, vacancy will temporarily

increase and we will be monitoring existing properties for tenant interest in their

available space.

Leasing and construction going strong in Northwest

2,257

Office Insight






15.6%Total vacancy




$20.76

$28.80$24.20 $24.21 $23.15 $23.30

$0

$10

$20

$30

CBD Far NorthCentral

NorthCentral

Northeast Northwest South

10.1%

12.6%

14.9%

16.6%

18.0%

24.1%

Northeast

North Central

Northwest

Far North Central

South

CBD

785,077 s.f.

300,000

400,000

500,000

600,000

700,000

800,000

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016









2,345,436

71,391242,177

68,109 106,594

-395,130

177,350 147,569

523,700 481,463

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$18.09$18.50

$17.07

$18.84 $19.03$19.98

$21.77 $22.12$22.98 $23.05

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016

13.0%12.5%

15.7%

14.5% 14.7%15.3%

15.9%

15.0% 14.8%

15.6%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016

2,455,333 2,356,223 2,352,670

1,226,664

487,471

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2012 2013 2014 2015 YTD 2016

©2016 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Travis Rogers | [email protected]

Peaking

market

Falling

market

Bottoming

marketRising

market

Far North Central

North Central

Northeast

Northwest

Land

lord

leve

rage

Tenant leverage

South

CBD

Office Statistics



absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 5,108,350 -123,848 -153,818 -3.0% 24.1% 24.1% $20.76 0 0

Far North Central Totals 1,338,083 15,560 61,148 4.6% 16.1% 16.6% $28.80 147,000 0North Central Totals 7,495,679 48,119 22,268 0.3% 12.3% 12.6% $24.20 48,000 0Northeast Totals 3,072,171 -13,928 14,637 0.5% 10.0% 10.1% $24.21 0 0Northwest Totals 9,109,963 147,494 556,006 6.1% 14.5% 14.9% $23.15 0 785,077South Totals 437,605 12,902 -18,778 -4.3% 18.0% 18.0% $23.30 0 0Suburban Totals 21,453,501 210,147 635,281 3.0% 13.3% 13.6% $24.04 195,000 785,077San Antonio Totals 26,561,851 86,299 481,463 1.8% 15.4% 15.6% $23.05 195,000 785,077

Downtown A 1,872,154 25,694 -2,373 -0.1% 13.9% 14.0% $25.67 0 0

Far North Central A 521,899 7,780 40,389 7.7% 22.0% 23.2% $30.05 147,000 0North Central A 3,505,866 24,159 15,040 0.4% 13.7% 13.7% $26.07 48,000 0Northeast A 785,543 -16,367 2,394 0.3% 30.6% 30.6% $25.92 0 0Northwest A 3,809,503 90,658 463,189 12.2% 16.1% 17.0% $26.37 0 458,077Suburban A 8,622,811 106,230 521,012 6.0% 16.8% 17.3% $26.49 195,000 458,077San Antonio A 10,494,965 131,924 518,639 4.9% 16.3% 16.7% $26.36 195,000 458,077

Downtown B 3,236,196 -149,542 -151,445 -4.7% 30.0% 30.0% $19.44 0 0

Far North Central B 816,184 7,780 20,759 2.5% 12.4% 12.4% $27.38 0 0North Central B 3,989,813 23,960 7,228 0.2% 11.1% 11.5% $22.17 0 0Northeast B 2,286,628 2,439 12,243 0.5% 2.9% 3.0% $18.00 0 0Northwest B 5,300,460 56,836 92,817 1.8% 13.4% 13.4% $20.37 0 327,000South B 437,605 12,902 -18,778 -4.3% 18.0% 18.0% $23.30 0 0Suburban B 12,830,690 103,917 114,269 0.9% 10.9% 11.1% $21.50 0 327,000San Antonio B 16,066,886 -45,625 -37,176 -0.2% 14.7% 14.9% $20.66 0 327,000




Square feet under construction by class and submarket

Average asking rent by submarket and class


Northwest and North Central dominate with new productRidgewood Plaza delivered Far North Central during the first quarter. Of the 147,000 square feet available, 26.5 percent of the building was preleased by EOG. There are four other properties currently under construction. These properties are Vista Corporate Center (150,735 square feet), Security Service FCU (270,000 square feet), 1900 NW Loop 410 (57,000 square feet) and Huntington Center (52,000 square feet). Both Security Service FCU and 1900 NW Loop 410 are build-to-suits, 100 percent preleased to Security Service FCU and The Bank of San Antonio, respectively. Collectively, there is approximately 530,000 square feet under construction with 61.7 percent preleased.

One submarket experiences rent growth above the restThe Far North Central submarket recorded significant rental rate growth quarter-over-quarter. Not only did the Far North Central submarket experience the highest rent growth at 6.3 percent, it also has the lowest spread between Class A and B rental rates. Overall, San Antonio marketed rents have increased approximately 2.4 percent year-over-year. Looking at the market as a whole, spreads are the lowest in northern San Antonio and highest in the south or downtown. This is a result of newer and/or higher quality Class B office product in a booming northern corridor.

Most submarkets experience a slight increase in vacancySan Antonio’s total vacancy rate experienced a slight uptick quarter-over-quarter. The market generally bounces between 14.5 and 15.9 percent vacancy. With over two million square feet of new construction delivered between 2014 and 2015, tenants are moving between projects. While preleasing for new construction is high, the majority of the leasing activity comes from build-to-suit projects. As speculative developments, such as Ridgewood Plaza, deliver vacancy will temporarily increase in advance of tenants taking occupancy of their new space.

Build-to-suit activity remains strong

2,257

Office Insight






15.7%Total vacancy




10%

90%North Central Northwest

$25.87$30.05

$26.23 $25.77 $26.38

$19.05

$26.48$22.09

$18.00 $20.22$23.30

$0

$10

$20

$30


NorthCentral

Northeast Northwest SouthClass A Class B

21.7%

17.3%

12.6%

9.6%

16.5%

20.9%

CBD

Far North Central

North Central

Northeast

Northwest

South

529,735 s.f.under construction









446,982

2,345,436

71,391 242,177 68,109 106,594

-395,130

177,350 147,569523,700 395,164

-1000000-500000

0500000

1000000150000020000002500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$17.23 $17.61 $18.09 $18.50

$17.07

$18.84 $19.03$19.98

$21.77 $22.12$22.98 $23.09

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

15.7%

13.0%12.5%

15.7%

14.5% 14.7%15.3%

15.9%15.0% 14.8%

15.7%

10.0%11.0%12.0%13.0%14.0%15.0%16.0%17.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

2,049,366 2,146,7862,455,333 2,356,223 2,352,670

1,226,664

225,896

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,000

2010 2011 2012 2013 2014 2015 YTD2016


Peaking market

Falling market

Bottoming market

Rising market

Far North CentralNorth Central

Northeast

Northwest

Land

lord l

ever

age Tenant leverage

SouthCBD

Office Statistics



absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 5,108,350 -29,970 -29,970 -0.6% 21.7% 21.7% $20.82 0 0

Far North Central Totals 1,338,083 45,588 45,588 3.4% 16.8% 17.3% $28.42 147,000 0North Central Totals 7,447,679 -25,851 -25,851 -0.3% 12.4% 12.6% $24.12 0 52,000Northeast Totals 3,072,171 28,565 28,565 0.9% 9.6% 9.6% $23.88 0 0Northwest Totals 9,109,963 408,512 408,512 4.5% 16.1% 16.5% $23.16 0 477,735South Totals 437,605 -31,680 -31,680 -7.2% 20.9% 20.9% $23.30 0 0Suburban Totals 21,405,501 425,134 425,134 2.0% 14.0% 14.3% $23.93 147,000 529,735San Antonio Totals 26,513,851 395,164 395,164 1.5% 15.5% 15.7% $23.09 147,000 529,735

Downtown A 1,872,154 -28,067 -28,067 -1.5% 15.4% 15.4% $25.87 0 0

Far North Central A 521,899 32,609 32,609 6.2% 23.5% 24.7% $30.05 147,000 0North Central A 3,457,866 -9,119 -9,119 -0.3% 13.1% 13.2% $26.23 0 52,000Northeast A 785,543 18,761 18,761 2.4% 28.5% 28.5% $25.77 0 0Northwest A 3,809,503 372,531 372,531 9.8% 18.3% 19.4% $26.38 0 150,735Suburban A 8,574,811 414,782 414,782 4.8% 17.5% 18.1% $26.54 147,000 202,735San Antonio A 10,446,965 386,715 386,715 3.7% 17.1% 17.6% $26.43 147,000 202,735

Downtown B 3,236,196 -1,903 -1,903 -0.1% 25.3% 25.3% $19.05 0 0

Far North Central B 816,184 12,979 12,979 1.6% 12.6% 12.6% $26.48 0 0North Central B 3,989,813 -16,732 -16,732 -0.4% 11.8% 12.1% $22.09 0 0Northeast B 2,286,628 9,804 9,804 0.4% 3.1% 3.1% $18.00 0 0Northwest B 5,300,460 35,981 35,981 0.7% 14.4% 14.5% $20.22 0 327,000South B 437,605 -31,680 -31,680 -7.2% 20.9% 20.9% $23.30 0 0Suburban B 12,830,690 10,352 10,352 0.1% 11.7% 11.8% $21.32 0 327,000San Antonio B 16,066,886 8,449 8,449 0.1% 14.5% 14.6% $20.52 0 327,000

2705 Bee Cave Rd Suite 325 Austin TX 78746 tel +1 512 225 2701



Recent and projected construction deliveries (s.f.)


Annual average Class A sales price per square foot ($)


Class A & B average full service rental rates by submarket ($)


Fourth quarter closes with strong year of construction deliveries Two speculative projects, WestRidge Two at La Cantera (129,000 square feet)

and Heritage Oaks III (109,000 square feet), delivered during the fourth quarter.

Collectively, these properties delivered 100 percent vacant, however, if we look

at total preleased square footage at the time of delivery during the past 12-

months, the average prelease rate was 56.0 percent. The top three projects to

deliver in 2015 were all build-to-suit. These properties are 9500 Westover Hills

(180,000 square feet), 8100 Potranco (160,500 square feet), and WestRidge

One at La Cantera (129,000 square feet). In total, San Antonio added over 1.1

million square feet of new inventory during 2015.

Over 1.2 billion in annual sales volume San Antonio has experienced over 20 transactions larger than 50,000 square

feet during the course of 2015. Even with a handful of undisclosed sales prices,

San Antonio has cleared $1.2 billion in annual sales volume. Class A product

averaged $197 per square foot with a 7.1 percent cap rate. Over 97.0 percent of

this activity took place in the suburbs. The top three transactions in the last 12-

months were Ridgewood Park Office Campus, The Forum and Promenade at

Eilan I & II.

Where is the largest spread between Class A & B rents? Market rents can vary anywhere from $19.02 per square foot for Class B space

downtown or as high as $29.99 per square foot for Class A space in Far North

Central. The largest gap between Class A and B space is found downtown with

an almost $7.00 per square foot difference. Following downtown is Northwest

with a $6.00-per-square-foot difference. The smallest spread between office

product can be found in Far North Central at $3.59 per square foot. Looking at

the market as a whole, spreads are the lowest in northern San Antonio and

highest in the south or downtown. This is a result of newer or higher quality

Class B office product in a booming northern corridor.

Huge deliveries, mammoth sales, great 2015

2,257

-4.9% -2.7% 0.3%

1.8% 1.9% 1.9%

5.3% 6.2%

7.6%

Downtown

Midtown

Northeast

Northwest

Central Perimeter

$0

$50

$100

$150

$200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

62%

Of all known requirements for

office space associated with

suburban tech occupiers, sixty-two

percent by volume are targeting

options in Buckhead and/or

Midtown.

14.1% 15.2% 14.8% 12.5%

16.7% 17.4% 16.3% 15.2% 17.8%

20.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

5.9%

19.4%

25.9%

12.6%

6.0%

9.1%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

South

Northwest

Northeast

North Central

Far North Central

Downtown

$300.12

$142.67

$130.61

$124.24

Far Northwest North Central

Northeast Northwest

14.1% 15.2%

14.8%

12.5%

16.7% 17.4%

16.3%

15.2%

17.8%

20.2% 2005 2006 2007 2008

2009 2010 2011 2012

2013 2014

14.2% Text to describe number above

$197/s.f. Citywide annual average Class A sales

price per square foot

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

537,515

132,569

282,024 238,015

147,000 109,000

270,000

-

100,000

200,000

300,000

400,000

500,000

600,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

16 5 3

13

6 2

0

10

20

30

50,000 - 100,000 s.f. 100,000 - 200,000 s.f. > 200,000 s.f.

# o

f bl

ocks

Class A Class B

$25.87

$29.99

$26.22 $25.77 $26.29

$19.02

$26.40

$22.51 $20.14 $20.25

$23.30

$13

$18

$23

$28

$33

Downtown Far NorthCentral

NorthCentral


Class A Class B

Office Insight


26,366,851 Total inventory (s.f.)

84,067 Q4 2015 net absorption (s.f.)

$22.98 Direct average asking rent

526,000 Total under construction (s.f.)

14.8% Total vacancy

523,700 YTD net absorption (s.f.)

3.9% 12-month rent growth


13.9%

3.3%

12.8%

28.9%

19.9%

25.3%

14.2% 9.9%

3.1%

15.1% 13.7%

0%

10%

20%

30%

40%

Downtown Far NorthCentral

NorthCentral


Class A Class B

Where is the largest spread between Class A & B rents? Market rents in can vary anywhere from $19.02 per square foot for Class B

space downtown or as high as $29.99 per square foot for Class A space Far

North Central. The largest gap between Class A and B space is found downtown

with an almost $7.00 per square foot difference. Following downtown is

Northwest with a $6.00 per square foot difference. The smallest spread between

office product can be found Far North Central at $3.59 per square foot. Looking

at the market as a whole, spreads are the lowest in northern San Antonio and

highest in the south or downtown. This is a result of newer or higher quality

Class B office product in a booming northern corridor.









446,982

2,345,436

71,391 242,177

68,109 106,594

-395,130

177,350 147,569

523,700

-1000000

-500000

0

500000

1000000

1500000

2000000

2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$17.23 $17.61 $18.09

$18.50

$17.07

$18.84 $19.03 $19.98

$21.77 $22.12 $22.98

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

15.7%

13.0% 12.5%

15.7%

14.5% 14.7% 15.3%

15.9%

15.0% 14.8%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2,049,366 2,146,786

2,455,333 2,356,223 2,352,670

1,226,664

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 2015


Peaking

market

Falling

market

Bottoming

market Rising

market

Far North Central

North Central

Northeast

Northwest

Land

lord

leve

rage

Tenant leverage South

CBD

Office Statistics



absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 5,108,350 7,290 122,779 2.4% 21.1% 21.1% $20.67 0 0

Far North Central Totals 1,191,083 10,936 36,294 3.0% 10.7% 10.9% $26.74 54,217 147,000North Central Totals 7,447,679 -7,422 114,017 1.5% 11.2% 9.7% $24.47 177,000 52,000Northeast Totals 3,072,171 22,486 21,683 0.7% 9.7% 9.8% $24.44 0 0Northwest Totals 9,109,963 48,417 244,142 2.7% 17.1% 17.6% $23.18 906,906 327,000South Totals 437,605 2,360 -15,215 -3.5% 13.7% 13.7% $23.30 0 0Suburban Totals 21,258,501 76,777 400,921 1.9% 13.6% 13.3% $23.85 1,138,123 526,000San Antonio Totals 26,366,851 84,067 523,700 2.0% 15.0% 14.8% $22.98 1,138,123 526,000

Downtown A 1,872,154 10,967 73,169 3.9% 13.9% 13.9% $25.87 0 0

Far North Central A 374,899 3,790 7,340 2.0% 3.3% 3.9% $29.99 0 147,000North Central A 3,457,866 -13,647 59,857 1.7% 12.8% 9.4% $26.22 109,000 52,000Northeast A 785,543 10,856 8,743 1.1% 28.9% 29.5% $25.77 0 0Northwest A 3,809,503 2,844 151,075 4.0% 19.9% 21.1% $26.29 699,711 0Suburban A 8,427,811 3,843 227,015 2.7% 17.1% 16.3% $26.22 808,711 199,000San Antonio A 10,299,965 14,810 300,184 2.9% 16.5% 15.9% $26.17 808,711 199,000

Downtown B 3,236,196 -3,677 49,610 1.5% 25.3% 25.3% $19.02 0 0

Far North Central B 816,184 7,146 28,954 3.5% 14.2% 14.2% $26.40 54,217 0North Central B 3,989,813 6,225 54,160 1.4% 9.9% 10.0% $22.51 68,000 0Northeast B 2,286,628 11,630 12,940 0.6% 3.1% 3.1% $20.14 0 0Northwest B 5,300,460 45,573 93,067 1.8% 15.1% 15.2% $20.25 207,195 327,000South B 437,605 2,360 -15,215 -3.5% 13.7% 13.7% $23.30 0 0Suburban B 12,830,690 72,934 173,906 1.4% 11.2% 11.3% $21.48 329,412 327,000San Antonio B 16,066,886 69,257 223,516 1.4% 14.1% 14.1% $20.59 329,412 327,000




Rent growth Q4 2012 – Q3 2015


Recent and projected construction deliveries (s.f.)


Q3 average sales price per square foot by submarket ($)


Massive rent growth northeast During the fourth quarter of 2012, average full service asking rates in San Antonio hovered around $19.98 per square foot. Looking ahead three years, average full service rates have increased $2.65 per square foot to $22.63 per square foot. If we analyze rent growth by submarket, we can see the highest percent increase coming from the northeast, northwest and north central markets. During the fourth quarter of 2012, rental rates northeast were approximately $19.26 per square foot, full service. Since then, rates have bumped $4.98 per square foot to $24.24 per square foot, full service. This has taken the northeast from the fourth to second most expensive submarket in San Antonio, just behind far north central.

New inventory in the pipeline Three projects delivered at 22.0 percent preleased during the third quarter. These projects include Lockhill Crossing (127,000 square feet), One51 Office Centre (101,000 square feet) and Ridgewood Business Center II (54,000 square feet). Projects expected to deliver in the fourth quarter are WestRidge Two at La Cantera (129,000 square feet) and Heritage Oaks III (109,000 square feet). Finally, Ridgewood Plaza II (147,000 square feet) is expected to deliver during the first quarter of 2016. All of these projects are located northwest, north central and far north central.

Almost 1.5 million square feet trades hands One of the largest sales of the quarter occurred far northwest with KBS purchasing Promenade at Eilan I & II (205,000 square feet) from Lonestar Funds. Gemini Investments also made a big splash by acquiring partial interest in Rosemont Realty’s portfolio. This portfolio includes One International Centre (301,169 square feet), The Century Building (188,000 square feet), One Thousand Oaks (141,000 square feet) and Greenway Park (109,000 square feet). At the close of the third quarter, citywide average sales price hovered around $166 per square foot.

Largest property sales quarter, year-to-date

2,257

5.9% 19.4%

25.9% 12.6%

6.0% 9.1%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

SouthNorthwestNortheast

North CentralFar North Central

Downtown

$300.12

$142.67

$130.61

$124.24

Far Northwest North CentralNortheast Northwest

$166/s.f. Citywide average sales

price per square foot

537,515

132,569

282,024 238,015 147,000

- 100,000 200,000 300,000 400,000 500,000 600,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Office Insight


26,128,836 Total inventory (s.f.)

30,440 Q3 2015 net absorption (s.f.)

$22.63 Direct average asking rent

437,015 Total under construction (s.f.)

14.8% Total vacancy

439,633 YTD net absorption (s.f.)

3.2% 12-month rent growth










446,982

2,345,436

71,391 242,177 68,109 106,594

-395,130

177,350 147,569 439,633

-1000000-500000

0500000

1000000150000020000002500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$17.23 $17.61 $18.09 $18.50

$17.07

$18.84 $19.03 $19.98

$21.77 $22.12 $22.63

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

15.7%

13.0% 12.5%

15.7%

14.5% 14.7% 15.3%

15.9% 15.0% 14.8%

10.0%11.0%12.0%13.0%14.0%15.0%16.0%17.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

2,049,366 2,146,786 2,455,333 2,356,223 2,352,670

843,866

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,000

2010 2011 2012 2013 2014 YTD2015


Peaking market

Falling market

Bottoming market

Rising market

Far North Central North Central

Northeast

Northwest

Land

lord l

ever

age Tenant leverage South

CBD

Office Statistics



absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 5,108,350 -9,324 115,489 2.3% 21.2% 21.3% $20.75 0 0

Far North Central Totals 1,191,083 -3,152 25,358 2.1% 11.7% 11.8% $26.45 54,217 147,000North Central Totals 7,338,679 46,261 121,439 1.7% 9.7% 10.0% $23.93 68,000 161,000Northeast Totals 3,072,171 2,238 -803 0.0% 10.4% 10.6% $24.24 0 0Northwest Totals 8,980,948 16,638 195,725 2.2% 16.5% 17.0% $22.65 777,891 129,015South Totals 437,605 -22,221 -17,575 -4.0% 14.2% 14.2% $23.30 0 0Suburban Totals 21,020,486 39,764 324,144 1.5% 12.9% 13.2% $23.38 900,108 437,015San Antonio Totals 26,128,836 30,440 439,633 1.7% 14.5% 14.8% $22.63 900,108 437,015

Downtown A 1,872,154 -54,653 62,202 3.3% 14.3% 14.5% $25.87 0 0

Far North Central A 374,899 2,574 3,550 0.9% 4.3% 4.9% $29.99 0 147,000North Central A 3,348,866 39,651 73,504 2.2% 9.3% 9.7% $25.75 0 161,000Northeast A 785,543 -6,335 -2,113 -0.3% 30.3% 30.9% $25.77 0 0Northwest A 3,680,488 23,869 148,231 4.0% 17.1% 18.4% $25.89 570,696 129,015Suburban A 8,189,796 59,759 223,172 2.7% 14.6% 15.4% $25.89 570,696 437,015San Antonio A 10,061,950 5,106 285,374 2.8% 14.5% 15.2% $25.88 570,696 437,015

Downtown B 3,236,196 45,329 53,287 1.6% 25.1% 25.2% $19.07 0 0

Far North Central B 816,184 -5,726 21,808 2.7% 15.0% 15.0% $25.98 54,217 0North Central B 3,989,813 6,610 47,935 1.2% 10.0% 10.2% $22.51 68,000 0Northeast B 2,286,628 8,573 1,310 0.1% 3.6% 3.6% $19.78 0 0Northwest B 5,300,460 -7,231 47,494 0.9% 16.0% 16.0% $20.23 207,195 0South B 437,605 -22,221 -17,575 -4.0% 14.2% 14.2% $23.30 0 0Suburban B 12,830,690 -19,995 100,972 0.8% 11.8% 11.9% $21.40 329,412 0San Antonio B 16,066,886 25,334 154,259 1.0% 14.5% 14.5% $20.58 329,412 0




5-year labor force growth and current unemployment rate


Average asking rent by submarket and class




San Antonio # 3 for lowest unemployment and highest labor force growthSan Antonio ranks third for lowest unemployment of all U.S. metropolitan areas with a population greater than one million, with an unemployment rate at 3.4 percent. San Antonio falls behind Austin and Salt Lake City with unemployment rates at 3.0 and 3.1 percent, respectively. When we take five-year labor force growth into account, San Antonio ranks third at 7.6 percent, Dallas in second at 8.4 percent and Austin in first at 13.4 percent. Demand for office space will continue to rise as San Antonio’s labor force grows with low unemployment.

Demand forcing rental rates to rise, CBD remains at low end of spectrumWith so much growth in San Antonio and Texas in general, demand for office space continues to grow and with growing demand comes higher rental rates. San Antonio’s rental rates have jumped 30.0 percent since 2005, only decreasing once in 2009. Year-over-year, San Antonio has recorded rent growth of 3.4 percent. The highest rental rates are concentrated north of downtown in suburban markets rather than downtown. San Antonio’s CBD has the lowest rental rate for both class A and B space, making it unique in the Texas market.

Lowest total vacancy since 2008San Antonio’s total vacancy rate is now at its lowest point since 2008. The market now sits at 14.0 percent total vacancy in comparison to 2008 when vacancy was at its lowest point in a decade at 12.5 percent. When the economy went into recession in 2009, total vacancy rates jumped 3.0 percent to 15.7 percent. San Antonio is almost back to its pre-recession state as economic conditions continue to heat up as more and more companies take notice of the business friendly climate in Texas.

San Antonio’s high growth, low vacancy

2,257

20.7%

7.4%

10.6%

10.6%

15.2%

9.2%

CBD

Far North Central

North Central

Northeast

Northwest

South

$25.41

$29.99

$25.52 $25.77 $25.60

$19.05

$26.08

$22.14

$19.97 $19.73

$23.29

$15

$20

$25

$30


NorthCentral


Class A Class B

Office Insight






14.0%Total vacancy




0% 2% 4% 6% 8% 10% 12% 14%

BostonColumbus

DallasMinneapolis

Oklahoma CitySan Antonio

Salt Lake CityAustin

5-Year Labor Force Growth Unemployment Rate









446,982

2,345,436

71,391242,177

68,109 106,594

-395,130

177,350 147,569334,252

-1000000

-500000

0

500000

1000000

1500000

2000000

2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$17.23 $17.61$18.09

$18.50

$17.07

$18.84 $19.03$19.98

$21.77 $22.12 $22.41

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

15.7%

13.0%12.5%

15.7%

14.5% 14.7%15.3%

15.9%

15.0%

14.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

Landlord le

verage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

2,049,366 2,146,7862,455,333 2,356,223 2,352,670

459,173

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 YTD2015

CBD

©2015 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Ryan Harchar | [email protected] and James Leary | [email protected]

Suburbs

Office Statistics



absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 5,199,872 -5,864 14,514 0.3% 20.6% 20.7% $20.31 0 0

Far North Central Totals 1,136,866 9,227 26,247 2.3% 6.7% 7.4% $27.03 0 0North Central Totals 7,338,679 59,248 75,178 1.0% 10.1% 10.6% $23.66 68,000 310,217Northeast Totals 3,072,171 -2,156 -3,041 -0.1% 10.5% 10.6% $24.14 0 0Northwest Totals 8,753,141 88,261 179,087 2.0% 14.6% 15.2% $22.72 370,084 227,807South Totals 437,605 436 42,267 9.7% 9.2% 9.2% $23.29 0 0Suburban Totals 20,738,462 155,016 319,738 1.5% 11.9% 12.3% $23.33 438,084 538,024San Antonio Totals 25,938,334 149,152 334,252 1.3% 13.6% 14.0% $22.41 438,084 538,024

Downtown A 1,872,154 -572 7,549 0.4% 11.3% 11.6% $25.41 0 0

Far North Central A 374,899 -1,287 -1,287 -0.3% 5.0% 5.6% $29.99 0 0North Central A 3,348,866 27,078 33,853 1.0% 10.0% 10.9% $25.52 68,000 256,000Northeast A 785,543 4,222 4,222 0.5% 29.5% 30.1% $25.77 0 0Northwest A 3,680,488 61,609 124,362 3.4% 17.7% 19.0% $25.60 289,515 101,181Suburban A 8,189,796 91,622 161,150 2.0% 15.1% 16.1% $25.67 357,515 357,181San Antonio A 10,061,950 91,050 168,699 1.7% 14.4% 15.3% $25.64 357,515 357,181

Downtown B 3,327,718 -5,292 6,965 0.2% 25.8% 25.8% $19.05 0 0

Far North Central B 761,967 10,514 27,534 3.6% 7.6% 8.2% $26.08 0 0North Central B 3,989,813 32,170 41,325 1.0% 10.2% 10.3% $22.14 0 54,217Northeast B 2,286,628 -6,378 -7,263 -0.3% 3.9% 3.9% $19.97 0 0Northwest B 5,072,653 26,652 54,725 1.1% 12.4% 12.5% $19.73 80,569 126,626South B 437,605 436 42,267 9.7% 9.2% 9.2% $23.29 0 0Suburban B 12,548,666 63,394 158,588 1.3% 9.8% 9.9% $20.96 80,569 180,843San Antonio B 15,876,384 58,102 165,553 1.0% 13.1% 13.2% $20.18 80,569 180,843




Large deliveries with continued construction north and northwest

Over 500,000 square feet of construction delivered in San Antonio’s north and northwest markets in the first quarter. All of the new inventory to hit the market was 100 percent leased and three of the four delivered buildings are occupied by a single tenant. These major tenants include CyrusOne at 180,000 square feet, Harland Clarke at 129,000 square feet and the United States Government at 160,000 square feet. There are currently six buildings under construction, representing over 600,000 square feet of new office inventory. All of the projects are being developed by one of two companies, Stream or RL Worth & Associates. A few of these buildings include Lockhill Crossing, Heritage Oaks III and Ridgewood II, which is 100 percent leased by Avnet. All of the new construction is expected to deliver by the end of 2015.

Square feet under construction by class and submarket


Large sale in north market breaks San Antonio record

Almost a million square feet of office space traded hands this quarter across the north and northwest markets. The largest trade was RidgeWoodPark Office Campus in northern San Antonio with 618,000 square feet selling for over $150 million. Select Income REIT purchased the campus and broke a record for the highest total price paid for an office development in San Antonio’s history. The second highest transaction took place last quarter with the purchase of Bank of America Plaza, a high-rise in downtown San Antonio. This sale was also rumored to have also broken the $100 million dollar threshold. Other notable transactions involved Overlook at the Rim, Heart Plaza One and the iHeartCommunications building northwest. Together, these transactions represent a sales volume of more than $220 million.

Square feet sold by submarket


17.8%Total vacancy





Office Insight


120,147

56,494

145,025

618,017

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000

North Central

Northwest

Far Northwest

Far North

256,000

54,217 101,181

207,195

Class A North Central

Class B North Central

Class A Northwest

Class B Northwest

Large construction deliveries and record-

breaking sales

357,181 Class A square feet under construction

Current conditions – market and submarket Historical leasing activity




Total vacancy rate




446982

2,345,436

71,391242,177

68,109 106,594

-395,130

177,350 147,569 185,100

-1000000

-500000

0

500000

1000000

1500000

2000000

2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

$17.23 $17.61 $18.09 $18.50$17.07

$18.84 $19.03 $19.98$21.77 $22.12 $22.55

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

15.0%15.9% 15.6% 15.7%

17.0%17.8%

17.1%16.5% 16.9%

17.8%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

19.0%

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

San Antonio

Landlord le

verage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

Non-CBD

CBD

2,049,366 2,146,786

2,455,333 2,356,223

1,135,336

183,048

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 Q1 2015

©2015 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Travis Rogers | +1 512 225 2718 | [email protected]

Office StatisticsSan Antonio | Q1 2015

Class Inventory (s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)

Downtown Totals 5,174,932 20,378 20,378 0.4% 16.4% 16.5% $20.76 0 0

Far North Central Totals 1,048,663 17,020 17,020 1.6% 18.4% 19.6% $26.32 0 0

North Central Totals 7,376,751 15,930 15,930 0.2% 13.2% 14.4% $23.11 68,000 310,217

Northeast Totals 3,079,434 -885 -885 0.0% 15.2% 15.5% $22.12 0 0

Northwest Totals 8,499,081 90,826 90,826 1.1% 20.4% 22.7% $22.79 309,015 308,376

South Totals 439,622 41,831 41,831 9.5% 7.2% 7.2% $23.27 0 0

Suburban Totals 20,443,551 164,722 164,722 0.8% 16.6% 18.1% $22.99 377,015 618,593

San Antonio Totals 25,618,483 185,100 185,100 0.7% 16.6% 17.8% $22.55 377,015 618,593

Downtown A 1,834,486 8,121 8,121 0.4% 12.2% 12.5% $25.41 0 0

Far North Central A 374,899 0 0 0.0% 5.2% 5.2% $29.13 0 0

North Central A 3,288,002 6,775 6,775 0.2% 12.6% 14.3% $24.91 68,000 256,000

Northeast A 691,487 0 0 0.0% 23.9% 24.6% $25.77 0 0

Northwest A 3,175,084 62,753 62,753 2.0% 30.1% 35.4% $25.37 309,015 101,181

Suburban A 7,529,472 69,528 69,528 0.9% 20.7% 23.7% $25.33 377,015 357,181

San Antonio A 9,363,958 77,649 77,649 0.8% 19.0% 21.5% $25.34 377,015 357,181

Downtown B 3,340,446 12,257 12,257 0.4% 18.7% 18.7% $19.09 0 0


North Central B 4,088,749 9,155 9,155 0.2% 13.7% 14.5% $21.77 0 54,217

Northeast B 2,387,947 -885 -885 0.0% 12.7% 12.8% $20.13 0 0

Northwest B 5,323,997 28,073 28,073 0.5% 14.5% 15.1% $19.62 0 207,195

South B 439,622 41,831 41,831 9.5% 7.2% 7.2% $23.27 0 0

Suburban B 12,914,079 95,194 95,194 0.7% 14.3% 14.9% $21.02 0 261,412

San Antonio B 16,254,525 107,451 107,451 0.7% 15.2% 15.7% $20.53 0 261,412

14100 San Pedro Avenue Suite 608 San Antonio TX 78232 tel +1 210 481 3300 fax +1 312 288 4298



Documents

San Antonio Office Insight and Statistics...Q1 2018 San Antonio Office Insight Following a flat fourth quarter to round out 2017, the first quarter of 2018 arrived with a similar tone