Economy: Unemployment Rate Edges Higher
San Antonio maintained stable market conditions in Q3 2026 despite moderating hiring activity. The unemployment rate measured 4.3%, up slightly from 4.0% one year earlier, while job growth remained positive with approximately 9,400 positions added across the metro area.
Supply and Demand: Vacancy Holds, Absorption Softens
San Antonio’s office market remained relatively stable in Q3 2026, with overall vacancy holding at 15.2%, a 160 basis points (bps) improvement year-over-year (YOY). Occupancy gains recorded earlier in the year helped sustain market stability, though tenant move-outs and space consolidations contributed to negative net absorption of approximately 65,000 square feet (sf) during Q3, bringing absorbed space year-to-date (YTD) to roughly 100,000 sf. In the Central Business District (CBD), vacancy rose to 18.8%, highlighting ongoing challenges in backfilling larger vacancies and continued efforts to reposition aging office assets.
Despite the quarterly occupancy decline, leasing activity remained robust, totaling nearly 497,000 sf and pushing YTD leasing volume to almost 1.5 million square feet (msf), an 8.0% increase compared to the same period in 2025. Leasing activity was concentrated primarily in the North Central and Northwest submarkets. The largest transaction of the quarter was completed by the General Services Administration (GSA), which signed a 37,000 sf lease at Waters Edge I.
Development activity remained subdued, with no projects under construction and no new deliveries completed during the quarter. The lack of new supply continued to support market fundamentals by limiting additional vacancy pressure while allowing existing inventory to gradually absorb demand and improve overall market balance.
Pricing: Rent Growth Remained Positive
Average asking rents continued to trend upward in Q3 2026, increasing 4.1% YOY to $28.67 per square foot (psf). Class A asking rents also climbed, reaching $32.02 psf, up 8.0% YOY and reflecting sustained demand for the market's highest-quality office product. With little new construction entering the market and obsolete inventory increasingly repositioned or removed from competition, top-tier buildings continue to capture the majority of leasing interest and support rent growth across the Class A segment.
