More than 4,000 new units have already been delivered across the region through July of this year . In recent years , the closest the area has seen to this type of supply volume was in 2018 ...
Under Construction
With approximately 19,000 units currently under construction but not yet leasing , new deliveries across Greater San Antonio will not be slowing down this year or next . The average construction to lease start duration for properties that began leasing in 2023 currently stands at nearly eighteen months , so the bulk of these 19,000 units under construction will likely begin leasing by the end of next year .
The leader in recent deliveries is also the leader in units under construction . Greater New Braunfels had around 2,700 units under construction at the end of July – up from earlier this year despite already delivering more than 1,000 new units . The South- Central San Antonio submarket finished July with more than 1,700 units under construction and the Downtown – Riverwalk area had about fifty units less in this phase of the pipeline .
Takeaways
The Greater San Antonio market benefitted in 2022 from a slight decrease in new supply relative to previous years at a time when the market suffered negative annual net absorption . This year , demand has improved from that trough , but the market has absorbed less than five hundred net units in the first seven months of the year . With economic headwinds , student loans payments restarting , and the softer part of the calendar ahead for multifamily demand – a substantial improvement does not seem likely in the near term .
Due to this demand environment , the active pipeline has been a challenge this year and appears set to remain so into next year . The units will ultimately be beneficial , but the ride will be a bumpy one in the short term .
Seven submarkets have had some level of new supply through July , but twenty-two submarkets of the twenty-five for Greater San Antonio have at least one property currently under construction . Deliveries will be more of a factor across the market in the coming months .
Pre-Construction
The pre-construction phase of the pipeline corresponds with projects that have yet to break ground but are expected to begin construction within the next two years . Because these are projects that have not yet reached the construction phase , this piece of the pipeline provides some flexibility for the market to respond to changing conditions over time .
In total , ALN ended July tracking more than 27,000 units in the pre-construction phase . This total was slightly lower than earlier this year , and it will not be a surprise in the least to see some further winnowing in the pre-construction phase of the pipeline that would decrease deliveries in 2025 and beyond .
The more outlying areas are well-represented in this phase of the pipeline as well , but the nearly 7,000 pre-construction units in the Downtown – Riverwalk area put it atop the list . Greater New Braunfels has another 4,000 units in this phase of the pipeline , and the Far West San Antonio submarket has more than 2,600 units . All twenty-five ALN submarkets have at least one project in a pre-construction phase .
24 AUGUST 2023 | WWW . SAAAONLINE . ORG