UNDERPERFORMING EFFICIENCY UNITS BUCK NATIONAL TREND
by Jordan Brooks
Market Analyst | ALN Apartment Data
I t is of particular importance to be mindful of performance trends below the market level at a time of increased uncertainty – both for the multifamily industry and the economy more broadly . With that in mind , using conventional properties of at least 50 units , let ’ s take a look at how rents have performed across Greater San Antonio for different floorplan types through July of this year .
All numbers will refer to conventional properties of at least 50 units .
Efficiency Units
No floorplan type has seen rent growth this year outpace last year , but this year ’ s cool off has been most pronounced for efficiency units . This development was counter to the national trend .
A dramatic downturn in apartment demand compared to recent years has been observed at the national level as well as for Greater San Antonio . Generally the top end of the market has been more resilient . A higher concentration of efficiency units are found in new properties and in Class A properties , two subsets with substantial overlap , so these units have generally performed better relative to recent history than the other floorplan types . The fact that this was not the case in Greater San Antonio , combined with a net loss of leased units so far this year , reflect that 2022 has so far been more of a challenge for San Antonio than the average market around the country .
Despite all this , average effective rent for new leases rose by about 4.5 % for efficiency units through July of this year . This was below last year ’ s eye-popping gain above 6 %, but also fell short of the rent appreciation from 2019 and equaled that from 2018 . Lease concession movement has been minimal for these units this year . About 16 % of units were offering a discount for new leases to end the period with an average discount value of approximately 2.5 weeks off an annual lease . Neither value was materially different from the start of the year .
One-Bedroom and Two-bedroom Units
A gain of just less than 8 % in average effective rent for one-bedroom units failed to meet the 2021 gain of 9 % but was well above any other recent year . The average units ended July leasing for $ 1,125 per month , or $ 1.64 per square foot . For two-bedroom units , a 7 % increase was short of last year ’ s gain of more than 9 % but outpaced other recent years by a margin similar to the one-bedroom units .