Takeaways
Unlike many markets around the country, the
Greater San Antonio area managed to stave off
both occupancy and effective rent declines in the
second quarter.
The availability of rent concessions has increased
from a year ago, but almost none of the increase
came in Q2 2020. 40% of conventional properties
were offering a new lease discount to end June,
up from 38% at the start of April. Less than onethird
of properties were offering a concession at the
end of Q2 2019. So, despite not taking place during
the second quarter, there has been a noticeable
move toward discounts over the last 12 months. The
average discount package finished June at three
weeks off a 12-month lease.
There were four submarkets that managed to post
gaudy rent growth numbers in the quarter. Of those
four, three are small areas with no more than 23 conventional
properties and the percent change numbers
can therefore be skewed by just one property.
The remaining submarket with impressive growth
was the Alamo Heights – Terrell Hills area. Average
effective rent growth there was 3.9%, but as mentioned
in the previous section, this gain came at the
expense of demand. On the other side of the rent
coin, the Greater New Braunfels, South Central San
Antonio and Stone Oak – Sonterra regions all lost at
least 1.5% in average occupancy - led by Greater
New Braunfels with a 2.7% loss.
Looking below just the aggregate market numbers
shows that average occupancy was more in an
environment of stasis, with most submarkets somewhere
between a slight decrease and a slight increase.
When it comes to effective rent change,
the lack of movement for the overall market obscures
the fact that a retraction was staved off only
by rent growth by a few small submarkets and by
one major submarket where the most new supply
was delivered, and net absorption was negative.
One benefit San Antonio has is slightly more than
half of the units in the new construction pipeline
have yet to break ground. New supply is likely to be
a headwind for at least the rest of the year, and the
flexibility provided by being able to delay up to half
of the pipeline should not be overlooked.
Looking ahead, the typically strong third quarter is
going to be entirely dependent on the level of success
of continued re-opening from COVID-19 lockdown
measures. If the economy is able to continue
re-opening mostly unabated, some rent growth
and an uptick in demand appears realistic. If not, a
pause in growth will undoubtedly give way to losses.
www.saaaonline.org | AUGUST 2020 SPECIAL EDITION 21