Takeaways
An interesting dichotomy emerged at the price class level . Demand at the top of the market showed robust year-over-year improvement . The remaining two price tiers also bettered their results from the same portion of last year , but by much smaller margins . For Class D , net absorption through June was negative for a third consecutive year .
The net effect of higher apartment demand paired with much higher new supply was an average occupancy loss of 230-basis points to end June at 85 %. For properties that entered the year already stabilized , average occupancy closed the period at 90 %. Average occupancy is now lower than at any point in the last fifteen years , and stabilized average occupancy finished June at its lowest point since 2010 .
The first half of the year was challenging for Greater San Antonio multifamily , but it was not all bad . A deluge of new units more than counteracted the notable improvement in apartment demand and the imbalance sent average occupancy tumbling . Not surprisingly , lease concessions continued to play a growing role in the market . Despite these developments , average effective rent growth managed to claw its way above 1 % on the back of strong growth at the top of the market .
Looking ahead to the end of the year , obstacles remain . The market will need to see positive progress continue through the end of the summer to mitigate the step backward that is likely to materialize at the end of the year .
Average Effective Rent and Lease Concessions
Thanks in large part to the positive demand environment at the top of the market , average effective rent for new leases managed to gain some ground in the period . A 1.2 % gain at the market level pushed the average rent to $ 1,237 per month and ensured that last year ’ s slight decline at the halfway point of the year would not be repeated .
* Jordan Brooks is a Senior Market Analyst at ALN Apartment Data .
Despite these developments , average effective rent growth managed to claw its way above 1 % on the back of strong growth at the top of the market
However , rent growth was fairly concentrated rather than being a broad-based phenomenon across the market . For properties that began the year already stabilized , average effective rent for new leases rose by only 0.1 %. At the price class level , Class A properties realized a gain of 3.8 % but the Class B and Class C increases were much lower at 0.7 % and 0.3 %, respectively . A 1.2 % decline for Class D properties was a slightly higher loss than in the same portion of 2023 .
Lease concession availability rose from the start of the year , but not as much as was the case last year . A 7 % increase brought the share of conventional properties offering a discount for new residents to 43 % to close June . Discount availability is now equal to its pandemic-era peak with further increases likely by the end of the year . The average discount value ended the period at 3.5 weeks off an annual lease – the highest value since the summer of 2010 .
20 AUGUST 2024 | WWW . SAAAONLINE . ORG 24 AUGUST 2023 | WWW . SAAAONLINE . ORG