New Braunfels-Seguin apartments see larges annualized growth over last 3 months
Tuesday, May 07, 2019
SA Business Journal - Local apartment occupancy hit a three-year high in April, up 40 basis points from March and 110 basis points from April 2018.
April ended with 90.6% of apartments in San Antonio occupied, according to the latest monthly report by ApartmentData.com, up from 90.2% last month, 89.5% in April 2018 and up from last summer's peak of 90.5% in August and September.
Despite 15 apartment complexes, or 4,133 total units, being under construction and another 41 communities — or 11,750 units — proposed, the market's demand is beginning to catch up with supply. Apartment occupancy hasn't been this high since May 2016, when occupancy was 90.9%.
Total apartment absorption for April was 834 units. While the mark was 300 units below last April's figures and about 200 units below last month, it still represents positive growth. The average price per unit rose by $1 to $958 per month, remaining at $1.13 per square foot. San Antonio's operating supply is unchanged at 905 communities, or 191,943 units. Over the last 12 months, rents have risen by 2.9%, while 6,421 units have been absorbed.
While having a smaller apartment supply than other areas of town, the Far Northwest corridor and the New Braunfels-Seguin submarkets have seen the largest annualized growth over the last three months, at 14.4% and 11.1%, respectively.
There has also been an interesting trend in apartment concessions as total concessions offered fell in April for the third month in a row, this time by 2,100 units. This included a 2 percentage point decline in Class A units, a 5 percentage point fall in Class C units and a 4 percentage point drop in Class D units.
Class B was the only gainer of concessions, with more than 2,000 total units. This is the first time Class A concessions have fallen below 50% in at least two years, meaning apartment owners and operators may be feeling more confident about their ability to obtain the rents they want.
"The San Antonio apartment market has turned the corner and is beginning to strengthen after two years of relative softness due to heavy new product delivery. Occupancy is ticking up, concessions are decreasing, and new construction starts are at their lowest level in seven years. Operators are beginning to experience more pricing power in their rents, and traffic from prospective tenants has increased as the spring leasing season is upon us," said Will Balthrope, executive managing director at Institutional Property Advisors.
Meanwhile, more investors than ever are interested in San Antonio, Balthrope said.
"Pricing records are being set on every type of apartment investment, from Class A to value-add Class B," he said. "We are having a great turnout on our for-sale offerings, setting new records in investors coming to tour and offer on San Antonio apartment properties. The underlying operating fundamentals are improving, concessions are now decreasing, and the investment market is taking note. New buyers — priced out of Dallas, Houston and Austin — are coming to San Antonio looking for assets that meet their needs."
While San Antonio saw the highest rise in occupancy in April, a 2 basis point rise in Houston and a 10 basis point rise in Dallas-Fort Worth now means that multifamily occupancy is over 90% in all four major Texas metros. Average monthly rents also continue to rise in those markets.
By Ryan Salchert – Reporter, San Antonio Business Journal,
Category: Housing, MultiFamily, Apartments, MSA