LEASE CONCESSIONS REACH DECADE HIGH
O C T O B E R E D I T I O N
By Jordan Brooks , Senior Market Analyst ALN Apartment Data
The new construction pipeline continues to output new units to a degree not seen in decades . This new supply during a period of tepid apartment demand has applied downward pressure to average occupancy for the better part of two years now . Average occupancy at a much lower level than is typical has been a major impediment to robust rent growth during that same period .
One aspect of the rent growth is , of course , lease concessions . In a period of softer conditions for the multifamily industry , both the availability of discounts and the average concession value generally rise . For Greater San Antonio , one of those metrics has reached a level not seen since the Great Recession era .
JORDAN BROOKS
All numbers will refer to conventional properties of at least 50 units .
Lease Concession Availability
At the end of August , approximately 40 % of conventional properties across Greater San Antonio were offering a discount on new leases . This level of availability was virtually unchanged from the start of the year after a 50 % jump in availability occurred in the same portion of 2023 .
So far this year , peak availability was reached in February and again in May with 44 % of properties offering a discount . Lease concession availability declined slightly in each of the three months from June through August . This temporary retreat in discounts is typical and corresponds to a bump in demand that generally occurs in the summer months .
While availability has been relatively high this year , the average from the last five pre-pandemic years was one-third of properties offering a lease concession . The year-to-date average availability rate of 42 % through August of 2024 is therefore not miles ahead of that average . Even so , lease concession availability has been consistently higher this year than during 2020 and has been the highest of the last decade for the market .
This higher rate of availability has not simply been a dynamic driven by the glut of lease-up properties . 64 % of properties in lease-up were offering a lease discount for new residents at the end of August , up from about 57 % this time last year . For properties that entered 2024 already stabilized , 39 % were offering a discount compared to 30 % of stabilized properties a year ago . The increase in availability has been larger for stabilized properties over the last year than for lease-up properties .
While availability has been relatively high this year , the average from the last five prepandemic years was one-third of properties offering a lease concession .
28 OCTOBER 2024 | WWW . SAAAONLINE . ORG