MARKET UPDATE MULTIFAMILY MOMENTUM Continued Through the 3rd Quarter
by Jordan Brooks
Market Analyst | ALN Apartment Data , Inc .
As has been the case in much of the country , particularly across the South and Mountain-West , Greater San Antonio multifamily has enjoyed a rebound in 2021 unlike anything seen in decades . Due to the seasonality of the industry , absorption and rent growth tend to begin tailing off toward the end of the third quarter ( Q3 ) from the summertime peak . This year , the positive momentum persisted through the end of the quarter .
New Supply and Net Absorption
Deliveries ramped up in the third quarter , with 1,700 new units representing almost half of total new supply so far in 2021 . This year also marked the first time since 2018 that deliveries crossed the 1,000-unit threshold in the third quarter . Deliveries were geographically concentrated , as only four of the 25 ALN submarkets for Greater San Antonio saw any new supply in the period . The Greater Shavano Park – Elm Creek submarket led the way with just under 400 new units , followed by the La Cantera – Dominion – The Rim region with just over 350 new units .
Quarterly net absorption of approximately 4,500 units fell short of the roughly 5,000 net absorbed units from the second quarter , but this year ’ s level of demand easily outpaced any third quarter from the last handful of years . Encouragingly , apartment demand remained broad-based . Each of the four price classes exceeded last year ’ s July through September absorption numbers despite the fact that the demand rebound was already in full swing by that time . In terms of total units , the Class B space , with about 1,500 previously unoccupied units lease in the period , saw the strongest absorption . From the perspective of demand as a share of total units , and demand as a share of available vacant units , Class A was the leader with a little more than 1,100 net absorbed units . Strong results were not limited to the top classes , though . Class D properties saw the largest overperformance in the quarter compared to last year thanks to net absorption of more than 800 units .
Average Effective Rent and Lease Concessions
Effective rent growth was really the metric to stick out for the third quarter . The 6.6 % gain was not only obviously well beyond anything seen in more than a decade but was the first Q3 increase to even break 1 % since 2016 . Even more telling , rent growth in the quarter also beat the stunning second quarter gain of 5 %. Needless to say , the 13.4 % year-todate average effective rent gain is a double-edged sword . The growth reflects generational demand and strong fundamentals in a high-growth market ,