San Antonio Express-News (Sunday)
Occupancy ‘remarkably steady’ at area shopping centers
As struggling retailers shuttered stores and filed for bankruptcy amid the coronavirus pandemic, they left behind cavernous spaces at malls in San Antonio.
But while occupancy fell, a fairly stable economy, little new retail construction, and landlords and tenants working together are helping keep shopping centers nearly full, according to a report by Weitzman.
The occupancy rate — for about 47.3 million square feet of retail space across local shopping centers of 25,000 square feet or more — declined to 93.6 percent by Dec. 31. That’s a dip from 94.5 percent at the end of 2019.
“San Antonio has avoided a lot of the major retail closures,” Bob Young, Weitzman executive managing director, said during the commercial real estate firm’s annual conference last week. “The market remains remarkably steady.”
Sears last year closed its stores at South Park Mall and Rolling Oaks Mall, a combined 284,000 square feet. The locations were the company’s last remaining stores in San Antonio, ending its 92-year run in the area.
Stein Mart, Gold’s Gym, Pier 1 and Tuesday Morning — all of which filed for bankruptcy in 2020 — shut down a combined 12 locations in San Antonio. The
closures represent about
564,000 square feet of empty space, according to Weitzman.
Later this year, Macy’s is closing its stores at the Shops at Rivercenter and Rolling Oaks Mall. The company began clearance sales at the locations this month and will continue operating stores at South Park Mall, Ingram Park Mall, North Star
Mall and the Shops at La Cantera.
Some of the retailers that folded last year were going to go
out of business anyway — COVID-19 just accelerated their demise, Peter Linneman, founder and principal of real estate advisory firm Linneman Associates, said during the Weitzman event.
The “tragic” closures are the restaurants, stores and nail salons that were felled by the pandemic alone, he said.
Several companies took over empty spaces in San Antonio last year, helping mitigate rising
vacancy from closures.
Dick’s Sporting Goods moved into a 60,000-square-foot space at 321 NW Loop 410 that previously housed a Toys R Us and Babies R Us. Burlington opened in an old Babies R Us store at the Rim shopping center.
Goodwill San Antonio is relocating its transportation, logistics and warehousing operations center to a former Walmart on I-35 in Windcrest.
Pinstack — which operates venues with bowling, dining and other forms of entertainment in Austin, Allen, Plano and Irving — plans to open a location next year in the former Sears store at Park North Shopping Center, according to Weitzman.
Though many restaurants in San Antonio have closed due to the pandemic, new operators such as Filipino chain Jollibee have opened locations.
Developers completed about 355,000 square feet of new retail space in 2020, a big drop from the roughly 868,400 square feet during the previous year. However, Ikea’s 289,000-square-foot store at Weitzman’s Live Oak Town Center represented a big chunk of new construction in 2019.
Heading into this year, the distribution of COVID-19 vaccines and tenants’ ability to pay back deferred rents will affect how retail markets fare in San Antonio.
“If the effects of the pandemic linger in 2021, occupancy may decline further if tenants granted deferred rents in 2020 prove unable to pay in 2021,” Weitzman said in the report. “Any possible tenant fallout depends, though, on landlords’ and lenders’ ability to extend any rent deferrals.”
During the conference, Young predicted shoppers will feel more comfortable returning by the third and fourth quarters, and restaurant sales will recover as indoor dining reopens.
Stores will continue to be used not just for shopping but for curbside and delivery, Young added, and malls will be reworked.