PRICE CLASS PICTURE
SHIFTING FOR GREATER SAN ANTONIO
by Jordan Brooks
Market Analyst | ALN Apartment Data
After a historic 2021 in which explosive apartment demand led to runaway rent growth and a full retreat for lease concessions , the picture has shifted with the flip of the calendar to the new year . The change in dynamics is apparent at the price class level , particularly when comparing performance over the last 12 months to performance over the last three months . At the time of this writing , those periods are March 2021 through February 2022 and December 2021 through February 2022 .
As always , numbers will refer to conventional properties of at least 50 units .
Class A
Robust net absorption of about 3,500 units in the last year propelled Class A average occupancy up by nearly 10 % to close February at 90 % overall . That was the highest average occupancy for the top price tier to close February in the last few years by a wide margin and was also the highest absorption total of the last few years for the period . Even more unusual , of course , was the 21 % average effective rent gain over the last year . The average Class A unit ended February leasing for $ 1,570 per month for new residents after averaging approximately $ 1,300 in February of 2020 . The winter months are generally a relatively softer portion of the calendar for multifamily , but even compared to previous December through February periods , recent performance for Class A from a demand perspective has been underwhelming . Net absorption of just over 100 units in the three-month period was well below last year ’ s roughly 1,150 net units , but also fell short of the 250 or so net units from early 2020 . As a result , Class A average occupancy has regressed over the last three months by almost 2 %. On the other hand , last year ’ s rent growth momentum has somewhat carried over into the new year , and just in the last three months Class A average effective rent has gained 2.5 %.
Class B
Net absorption of almost 2,800 units in the Class B segment in the last 12 months was also higher than in either of the two previous annual periods and almost double that from March 2019 through February 2020 . Thanks to that demand , average occupancy rose by 4 % to close February of this year at 94 %. As with Class A , average occupancy finished the month well above its typical level . As recently as February 2020 Class B average occupancy was below 90 %. Also like Class A , annual average effective rent growth topped 20 % to bring the average unit to $ 1,369 per month .
Zooming in to look at just the last three months changes the picture . Net absorption was negative by nearly 200 units in the period , bringing average occupancy down by about 0.5 %. Last year saw a net gain of about 150 leased units in the same period . Average effective rent growth has remained very high and has actually trended up on a monthly basis for two consecutive months after a relative slowdown in December .