Rent Concessions
Roughly 40% of conventional properties in the Greater
San Antonio area were offering a discount to end the
month, up from 33% at the same time last year. Stabilized
properties are up to 38% offering a concession which is
up from about 31% in 2019. One interesting note is that
Class A properties offering a discount fell from 38% to 32%
just in just the last month.
Average Effective Rent
Average effective rent growth has been on a downward
trajectory nationally for some time now, and the
Greater San Antonio area has been no exception. That
shallow downward trajectory experienced a jolt in April.
For the area overall, rent growth was flat after a monthly
gain of 0.5% and 0.7% in April 2019 and 2018 respectively.
The silver lining is that effective rent growth avoided
going negative for the month, but with May likely to be
a rougher month, this does not bode well for May rent
performance.
Rent growth in April for stabilized-only properties has
closely tracked the overall market for the last couple of
years but this year saw stabilized properties experience
a 0.2% average effective rent decline.
Once again, considering conventional properties by
price class exposes some real differences. Class A rent
growth was a robust 1.4% during the month, easily outpacing
the other groups. This is the first April of the last
three years in which rents did not retract for Class A properties.
Class B effective rent growth was just over 0.1%
– about 25% of the April 2019 gain. Class C properties
were hit hardest. Last year, average effective rent rose
by 0.8% during the month, this year these properties lost
0.8%. Class D properties also lost some ground, but only
by 0.2%.
Takeaways
Coming off a lackluster first quarter, April was predictably
choppy for the San Antonio market. Effective rent
growth was flat, as was average occupancy, and demand
was sharply lower as well. One mitigating factor
was a lower volume of new supply delivered during the
month compared to the same time frame in previous
years. This helped counterbalance the lack of demand
and maintain average occupancy.
Stabilized properties held up somewhat well compared
to the overall market. Rent growth and net absorption
did go slightly negative, but average rent change was in
the neighborhood of the overall market and so was the
availability of lease concessions.
Class A properties, for one month anyway, were seemingly
immune to the impact of COVID-19. Demand was
comparable to the same period in recent years, rent
growth was very strong and the availability of concessions
decreased. Class B properties lost net rented units
but managed to hold ground on the rent front. For the
bottom two price tiers, demand was down, and average
rent declined.
April was certainly no walk in the park for the area, and
May is likely to be rougher still. With the state beginning
a partial re-opening, there may be some light at the end
of the tunnel as summer approaches if all goes well. With
so much still unknown, only time will tell.
www.saaaonline.org | JUNE 2020 SPECIAL EDITION 21