MARKET UPDATE
April Multifamily Performance in the Face of COVID-19
by Jordan Brooks
Market Analyst | ALN Apartment Data, Inc.
The dominant story of 2020 continues to be COVID-19
and the fallout from both the virus and the response
to it. The impact is being felt across the economy,
and multifamily real estate is no exception. April was
the first full month in which a majority of the country was
locked down and provides a first full look at what that
may look like for the apartment industry. Using conventional
properties of at least 50 units, let’s take a look at
how April 2020 stacked up against the month of April
from recent years.
Average Occupancy
For the month of April, average occupancy has moved
within a narrow range in the last five years for the San
Antonio area, never dipping below 88.7% and never rising
above 89.7%. Average occupancy finished this April
at 89.1% but what was different about this year was the
absence of an occupancy gain during the month. In
the same period in 2018 and 2019 average occupancy
rose by 0.5% and 0.4% respectively while this year, there
was no movement.
Average occupancy for each price class in San Antonio
ended the month at a level comparable to recent
years. Here though, the monthly movement wasn’t as
uniform. Class A properties managed a 0.2% increase
after suffering a retraction of around 0.5% in April of 2019.
Class B properties did the inverse, losing 0.2% this year after
gaining about 0.4% last April. Class C properties also
gained about 0.2%, a gain one-third that of last April’s,
and Class D properties held steady after a 0.5% increase
in the same period last year.
Net Absorption
Net absorption is where multifamily performance begins
to diverge from that of recent years. Monthly demand
fell to 20% that of April 2019, and 17% that of April 2018.
After about 1,000 previously unoccupied units were rented
in April of 2019, only around 200 were rented this year.
The drop-off is starker when evaluating only those properties
that entered the month already stabilized. Net
absorption in these properties was essentially zero after
being above 500 and 700 units in April 2019 and April
2018 respectively.
When broken out by price class, the market falls into two
performance categories – Class A and everything else.
Class A demand was slightly less this year than in the
past couple of years, but the difference is less than 50
net units. For price classes B and D, positive net absorption
last April turned into a net loss of rented units this
year. In Class C, demand was positive, but only 25% of
that in April 2019.
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