With all the recent hubbub about the rise in home prices and the growth San Antonio’s housing market, it may be easy to forget that Alamo City is among the country’s hottest commercial real estate markets.

In a recent report, the National Association of Realtors identifies San Antonio as one of the top 10 commercial real estate markets in the U.S. Austin is the only other Texas market to appear on the unranked list.

“While the office market is still broadly facing declining absorption, secondary markets are experiencing an increase in office occupancy, given the relatively affordable residential and commercial prices in these markets,” notes NAR’s Commercial Markets Insights report from September, with San Antonio being among such markets.

San Antonio’s proximity to boomtown Austin is part of what is benefiting the market.

“San Antonio is benefiting from the strong growth in the Austin market, given its proximity to Austin and its more affordable residential and commercial prices,” the report continues. “It has a lower vacancy rate than Austin, at 10.1 percent. As such, the area is experiencing faster office rent growth of 1.7 percent, compared to Austin’s 0.5 percent.”

Factors in San Antonio’s favor that the report outlines include:

• Office occupancy has grown, rather than shrunk, in the past 12 months. Across the country, the COVID-19 pandemic has hammered the office sector, with millions of Americans telecommuting rather than heading to a workplace.
• In the multifamily segment (part of the commercial real estate sector), San Antonio has seen a net increase of 14,631 apartment units since the second quarter of 2020.
• The average transaction price of offices sales in the third quarter of 2021 was $145 per square foot, about a fifth of Austin’s.

“Even as the economy makes a steady recovery, the one sector still lagging behind has been the office market,” Lawrence Yun, chief economist at the National Association of Realtors, says in a news release. “Work-from-home flexibility looks to be the defining shift of the new post-pandemic economy.”

“Despite the overall challenges, however, some local markets are bucking the trend with more office occupancy and rising rents. A combination of strong in-migration and relatively lower cost of doing business is driving these growth markets,” Yun adds.