SAAA July 2020 Special Edition Residence Magazine | Page 21

Takeaways
by less than 1%. Most properties saw average rent
declines of less than 1%, but two properties fell by
more than 2%.
Classes C & D
Like the Class B properties, Class C properties also
did not see much change in average occupancy
and finished May at almost 92%. Class D properties
saw the strongest demand, with net absorption topping
150 units to bring average occupancy above
90%, an increase of nearly 0.5%.
Average effective rent growth was second worst
within Class C properties, decreasing by 0.8% in
the period. The difference compared to last year
is especially stark, in April and May of 2019 Class C
properties led all price tiers with a 1.7% gain. Class
D properties managed to combine an average occupancy
gain with the smallest average effective
rent loss – sliding by less than 0.3%. This does reflect
a shift in dynamic from the same period last year in
which rent growth was the most tepid among these
properties. It bears mentioning that the average
non-subsidized Class D unit rents for $100 per month
less than the average Class C unit.
Class A properties behaved differently than the remainder
of the market in April in May, namely by
maintaining effective rent growth at the expense
of occupancy. While this could indicate how operators
decided to approach these last couple of
rocky months, it undoubtedly reflects the impact of
the new supply at a time when demand has cratered.
The remainder of the Greater San Antonio market
experienced little movement in average occupancy,
but average effective rents declined. Class D
properties outperformed Classes B and C both in
average occupancy and effective rent performance.
Demand was almost non-existent in the
middle two tiers.
Looking ahead, it’s clear that new construction deliveries
are going to be a weight on the market for
some time. It still also remains to be seen how successfully
the country will re-open from the COVID-19
shutdowns and if a second wave in infections occurs.
Given the influence of sectors like hospitality,
travel and education in the San Antonio economy,
this will be of particular note.
Expect to see increasing reliance on lease concessions
across price tiers, and something to watch is
whether household consolidation continues. If so,
occupancies will be further pressured.
*ALN assigns each property in a market to a price
class A-D based on its average rent per sq.ft. percentile
www.saaaonline.org | JULY 2020 SPECIAL EDITION 21