STABILIZED PROPERTIES FEELING THE DEMAND SQUEEZE
by Jordan Brooks
Market Analyst | ALN Apartment Data
2022 has brought with it much change for the multifamily industry after the stratospheric bounceback in 2021 . Most notably , it has brought a downward shift in apartment demand . In the first five months of 2021 , the Greater San Antonio market absorbed more than 4,100 net units . In the same period this year , the area has shed a little more than 1,000 net rented units . Not only has this year underperformed even the COVID-impacted 2020 in terms of apartment demand through May , but 2022 represents the first time in the last decade that net absorption ended the first five months of the year in negative territory .
A helpful indication of market conditions is the performance of stabilized properties relative to the market as a whole . For a closer look at just that , conventional properties of at least 50 units will be used , and only properties that entered the year already stabilized .
Average Occupancy and Net Absorption
Properties that entered 2022 already stabilized have seen an average occupancy decline of just over 1 % so far this year and closed May at 94 % as a group . While occupancy remained higher than normal for May , the continued decline in occupancy that began late last year reflects the impact of softening apartment demand . After managing net absorption of about 1,250 units through May of last year , stabilized properties have suffered the net loss of about 2,000 rented units this year .
The largest average occupancy declines from a price class perspective were at the opposite ends of the scale . Class A stabilized properties , competing with new deliveries as well as existing stock , saw a net loss of nearly 400 leased units through May as average occupancy declined by 1.6 % to 94 %. Similarly , Class D properties shed almost 800 net leased units in the period and experienced a 2 % average occupancy decline to finish May at a little over 92 %.
Average Effective Rent and Lease Concessions
Rent growth for stabilized properties has not yet materially responded to the change in the