RENT GROWTH
CONTINUED IN Q1 EVEN AS DEMAND TUMBLED
by Jordan Brooks
Market Analyst | ALN Apartment Data
After a year in 2021 in which both apartment demand and rent growth soared to exceptional levels , 2022 has gotten off to a decidedly different start both nationally and across the Greater San Antonio market . While rent growth has maintained its torrid pace , apartment demand has softened considerably . Around the country , about 40 % of markets suffered negative net absorption in the opening three months of the year , with San Antonio being among them .
As a reminder , all numbers will refer to conventional properties of at least 50 units .
New Supply and Net Absorption
New supply in the opening quarter of this year totaled just less than 400 new units . This volume was on par with the total from the opening quarter of 2021 but much lower than the average of about 1,800 new units established in the first quarters of 2018 through 2020 . Only two out of the 25 ALN submarkets for Greater San Antonio saw any new units delivered in the period , with almost all of them located in the Stone Oak – Sonterra submarket .
A lower level of new supply was a benefit to average occupancy within the context of much lower apartment demand . A net loss of about 630 leased units in the period was the worst result by a wide margin of the last five years for an opening quarter and the only example of a net loss of rented units . Net absorption was negative for all price classes with the exception of Class A , with a net loss of a little more than 600 units in the Class D subset being the largest decline . Even Class A , while managing to stay in positive territory , saw a significant slide in demand from around 750 net absorbed units in Q1 2021 to less than 200 net absorbed units this year .
The net effect of relatively low new supply and the darkened demand picture was a 0.6 % loss in average occupancy at the market level to a little over 93 %. Average occupancy closed March significantly higher than in recent years even after the small decrease in the period – a major reason rent growth remained high .
Average Effective Rent and Lease Concessions
A 2.7 % jump in average effective rent for new leases was easily the largest of the last five years for an opening quarter , and very nearly doubled the 1.4 % gain in the period last year . The average unit in Greater San Antonio ended March leasing for $ 1,217 per month for a new resident which was