Asking rent rose by just over 5 % through the first six months of 2021 , so much of the effective rent gain was due to more aggressiveness on the part of operators . The other piece of the puzzle was lease concessions . After a 26 % reduction in concession availability through June , the area ended the month with about one-third of conventional properties offering a discount . The average concession value decreased as well , but not to the same extent . After a decrease of 13 %, the average discount value ended June at just below three weeks off an annual lease . This was precisely the level at the end of June 2019 .
Rent growth was much more pronounced in the top two price tiers . Class A properties managed a 12 % gain in the first half of the year while Class B properties realized a 9 % increase . For Class C and Class D , the growth was about 4 % and 1 % respectively . For Class D in particular , it is clear some challenges remain . Though the availability of discounts did decrease slightly through June , it is within this subset of properties that availability remains highest . Furthermore , Class D was the only price class to increase the average concession value this year . A 10 % increase brought the average package to a little more than three weeks off an annual lease .
Takeaways
After a challenging 2020 , this year is off to a strong start and Greater San Antonio is no exception . Apartment demand through June has been higher than in any year since 2012 . Combined with a reduction in new supply , this demand led to average effective rent growth not seen in more than a decade . Part of the rent growth was due to a drawdown in concession availability , but much of the growth came from operators increasing asking rents by more than 5 %.
The variance in rent growth according to price class demonstrates that the multifamily rebound has been playing out differently across these subsets . The most dazzling rent increases have been in the top two price tiers , but even the Class C rent growth nearly doubled the 2019 mark . It is only at the bottom of the market that tepid rent growth and continued heavy reliance on lease concessions relative to recent pre-COVID years remain .
Aside from the Class D issues , rent growth of the magnitude seen in the first half of the year in the other price classes risks exacerbating affordability issues , particularly in the Class C space . With the traditionally strong third quarter still ahead , the pace of continued rent growth bears monitoring .
. saaaonline . org | AUGUST 2021 15