MARKET UPDATE
2020 Multifamily : A Year in Review
by Jordan Brooks
Market Analyst | ALN Apartment Data , Inc .
2020 is finally officially over , but before moving fully into 2021 , a look back at how the Greater San Antonio multifamily market performed in 2020 is in order . All numbers will refer to conventional properties of at least 50 units .
New Supply and Net Absorption
Around 6,100 new units were delivered in 2020 , up from about 4,700 units in 2019 . While demand in some markets around the country struggled to keep pace with deliveries this was not the case for San Antonio . Net absorption of more than 5,900 units during the year was enough to hold average occupancy steady at 89.9 %. This level of demand was a full 1,000 units more than that in 2019 – quite a feat given all the challenges of the last year .
Of course , considerable variance emerged at the submarket level . New construction deliveries were concentrated in the Downtown – Riverwalk – King William and Stone Oak – Sonterra regions of the market with just over 1,300 new units each . Demand was strong enough in the latter area to push average occupancy up 0.9 % to 85 %, but in the downtown area , average occupancy fell an eye-popping 13 % to 71 %. However , an important mitigating detail is that the bulk of the new units downtown were delivered in the final quarter of 2020 . In Kerrville , two new properties were delivered but net absorption was negative by about 100 units . The resulting impact on average occupancy was a 20 % loss down to 78 %.
Average Effective Rent and Concessions
Average effective rent growth , though well short of recent years , did manage to narrowly outpace the national mark of 0.5 %. After annual gains above 3 % in both 2018 and 2019 , 2020 effective rent growth was 0.9 %. The average unit ended December with a rent of $ 1,020 per month . Rent growth was strongest in the smaller submarkets outside of San Antonio proper ; submarkets such as Kerrville , Boerne – Comfort , and Seguin . On the negative side , three areas lost at least 1 % in average effective rent : Downtown – Riverwalk – King William , Alamo Heights Terrell Hills , and Hollywood Park – Camino Real .
A hindrance to effective rent growth was a more substantial reliance on rent concessions . 44 % of conventional properties ended the year offering a new lease discount , up 15 % from the start of the year . One reason the market was able to eke out a rent gain was that unlike many markets around the country , there was not a considerable increase in the average discount value on top of the uptick in discount availability . Despite the market average of 44 %, seven of the 25 ALN submarkets for Greater San Antonio concluded 2020 with more than half of conventional properties offering a lease concession . Of these seven areas , none was higher than the 61 % of units offering concessions in the Northeast – Universal City – Live Oak submarket .