Economy: Labor Market Remained Stable
San Antonio maintained stable labor market conditions in Q3 2026 despite moderating hiring activity. The unemployment rate measured 4.3%, up slightly from 4.0% one year earlier, while annual job growth remained positive with approximately 9,400 positions added across the metro area.
Supply: Development Slows, Vacancy Continued to Improve
San Antonio’s industrial market continued to stabilize in Q3 2026 as development activity remained subdued. No new industrial product was delivered during the quarter, reflecting the impact of elevated financing costs and a more cautious development environment. While new supply has slowed considerably, approximately 2.3 million square feet (msf) remained under construction and is expected to deliver over the coming quarters. Limited new completions allowed the market to absorb existing vacant space more effectively, contributing to a 110-basis-point decline in overall vacancy from the prior quarter to 10.6%. As developers focus on leasing existing inventory before launching new projects, market fundamentals should continue to improve.
Demand: Leasing Momentum Accelerated
Industrial demand accelerated in Q3 2026, with leasing activity totaling 2.3 msf during the quarter, underscoring improving tenant confidence and sustained demand from warehouse and distribution occupiers. Year-to-date (YTD) leasing volume reached 5.1 msf, representing a 46.5% increase compared with the same period in 2025. Net absorption totaled approximately 310,000 square feet (sf) during the quarter, bringing YTD occupancy gains to 1.4 msf. Demand growth and stronger leasing activity helped reduce vacancy and demonstrate the market’s ability to absorb recently delivered inventory. Although occupiers remain selective, growth in logistics and distribution requirements has supported improving space needs, positioning the market for further stabilization through the remainder of the year.
Pricing: Rent Growth Remained Steady
Industrial asking rents continued to edge higher in Q3 2026. Overall average asking rents reached $8.85 per square foot (psf), reflecting modest growth from the previous quarter and 3.1% YOY. Warehouse/distribution space averaged $8.34 psf, benefiting from ongoing demand, while office service/flex rents remained steady at $12.61 psf. Although rent growth has moderated from the rapid pace seen in recent years, limited new supply and improving market conditions continue to support pricing stability across market.
