MARKET UPDATE
Greater San Antonio Price Class Performance
by Jordan Brooks
Market Analyst | ALN Apartment Data , Inc .
2020 brought a dramatic shift in market conditions for the economy and for multifamily specifically . One of the trends that emerged was an increased divergence in performance across the price classes with the lower tiers generally seeing an increase in demand at the expense of the top tiers .
The Greater San Antonio area managed to weather the storm fairly well , even in the face of increased new supply . This month let ’ s evaluate price class * performance for the more recent three-month period of November through January . It is important to keep in mind that in what is a very seasonal industry , these winter months are typically a softer portion of the year for multifamily .
Only conventional properties of at least 50 units will be included .
Class A
For the three-month evaluation period , average occupancy for Class A remained essentially flat at around 81 %. This compared favorably to the same timeframe one year earlier when average occupancy in the top tier dropped by 2 %. Average occupancy held even as about 1,300 new units were delivered – up from approximately 750 new units from November 2019 through January 2020 . All of this good news is thanks to very strong demand . Class A properties absorbed just more than 1,000 net units in the period after net absorption of just under 300 units in the same span in the previous year .
The situation was positive on the rent growth side of the equation as well . Average asking rent increased by 1.2 % over the three months , and average effective rent rose by 1.6 %. At the end of January , the average unit was renting for $ 1,350 per month . One factor that aided rent growth was a drawdown in reliance on lease concessions . The average discount value held steady at 7 %, or a little under four weeks off a 12-month lease , but the availability of discounts winnowed . About 40 % of conventional properties ended January offering a new lease discount , down 13 % from the start of November . This level of availability is lower than at the close of January 2020 , before the COVID-19 pandemic really began making an impact .
Class B
Average occupancy for Class B properties fell by a little more than 1 % to about 90 %. New supply at the top of the market pushed more than 700 units down from a Class A designation into Class B . Apartment demand in this subset of properties was not enough to offset those ‘ new ’ units , as only about 250 previously unoccupied units were rented in the period . Even