MARKET UPDATE
What a Difference a Quarter Makes
by Jordan Brooks
Market Analyst | ALN Apartment Data , Inc .
T he holiday season approaches , and another quarter is in the books . It has been a challenging year , to say the least , and the third quarter follows a quarter in which there was essentially no movement in average occupancy or average rent for the Greater San Antonio area . Including only conventional properties of at least 50 units , let ’ s look at how multifamily performed in the third quarter .
Net Absorption and Average Occupancy
Net absorption , meaning the net change in the number of rented units for a period , surpassed 1,800 units in the third quarter after totaling only about 700 rented units in the second quarter . This level of demand fell a little short of the 2,100 absorbed units in the third quarter of 2019 . However , it compared more favorably to the same quarter in 2019 than was experienced in the second quarter of this year . In a typical year the middle two quarters drive much of annual rent and occupancy growth in an industry as seasonal as multifamily , so third quarter demand more in-line with previous years is a welcome sight .
The Greater San Antonio market took advantage of a slowdown in deliveries and a resurgence in demand compared to earlier in the year and added 2 % to average occupancy in the quarter . That gain was the largest of the last three years for this part of the year . Average occupancy ended September at just below 91 % and has moved within a narrow band between 90 % and 91 % for the three most recent third quarters . In the second quarter , eight of 25 ALN submarkets lost ground in average occupancy . In the third quarter , that number was down to three . Of those three , two submarkets had an average occupancy that remained higher than the overall market and the remaining submarket was the location of the only new units introduced in the quarter .
Average Effective Rent and Lease Concessions
The average unit in the Greater San Antonio area ended September renting for $ 1,021 per month after a 0.6 % gain in the quarter . This increase in average rent is almost identical to that from the third quarter in 2018 and in 2017 , with gains of 0.7 % and 0.8 % respectively . This return to normalcy on the rent front compares favorably to the second quarter of this year when rent growth stagnated during a portion of the year that managed a 1.7 % gain in 2019 .
The encouraging news regarding lease concessions is that the availability of concessions did not increase during the third quarter . The less encouraging news is that about 40 % of conventional properties are currently offering a discount . In the last couple of years , the Greater San Antonio market has closed September with around one-third of properties offering a discount , so availability remains somewhat elevated . In terms of the value of the average discount offered , there was similarly little movement . The average concession package ended the quarter at three weeks off a 12-month lease . That is slightly lower than Texas as a whole , where the average value is closer to four weeks .