MARKET UPDATE 2021 : A FINAL LOOK
by Jordan Brooks
Market Analyst | ALN Apartment Data
2021 was quite a year for the multifamily industry . Record apartment demand propelled average occupancy and average effective rent up and drove lease concessions down even in the face of an active new construction pipeline . The Greater San Antonio area in many ways typified these developments on the way to annual performance unlike anything in recent history .
All numbers will refer to conventional properties of at least 50 units .
New Supply and Net Absorption
The only metric in which Greater San Antonio multifamily did not align with the broader national picture was in new supply . With just over 3,500 new units delivered , 2021 represented a drawdown from around 6,000 new units in 2020 and was below the average of about 5,400 new units established from 2018 through 2020 . Despite all of the challenges to construction throughout the year , a similar decrease compared to recent years was not observed at the national level . The Far West submarket , an area surrounding Sea World and extending south to Highway 90 , added the most new supply with just more than 850 new units delivered . Other notable regions were Greater Shavano Park – Elm Creek and La Cantera – Dominion – The Rim , with each adding more than 350 new units . In all , only 12 of the 25 ALN submarkets for Greater San Antonio saw any new deliveries during the year .
In apartment demand , the market mirrored the nation . Net absorption totaling nearly 11,000 units was more than that from 2019 and 2020 combined . It is important to remember that the apartment demand recovery began in the summer of 2020 and the annual total for that year was actually higher than in 2019 . This makes the fact that 2021 demand was higher than those two previous years combined all the more impressive . The end result of a decrease in new supply paired with a wave of apartment demand was a 3 % average occupancy gain to close December at a hair below 94 % for the market overall .
In particular , the surge in apartment demand was seen in the price Class B and Class D subsets . Class A , with a healthy net absorption of just over 3,500 units , was not much higher than in 2020 . But for Class B properties , a 1,500-unit net gain in leased units during 2020 was followed in 2021 by net absorption of approximately 3,400 units . Additionally , after suffering a net loss of about 35 leased units in 2020 , Class D properties absorbed almost 1,700 net units in 2021 .
Average Effective Rent and Lease Concessions
Unsurprisingly , higher occupancies and dazzling demand sent rent growth into the stratosphere . The annual average effective rent gain ended up at 16 %. For some context , no year in the last five bettered the 3.5 % appreciation in 2018 . Rent growth for the Greater San Antonio market was lower in 2021 than in Dallas – Fort Worth and Austin but was higher than the 14 % gain in Houston .