San Antonio 2Q23
Multifamily Market Report

$1,272

average rent

92.3%

average occupancy rate

$473.4M

ytd sales volume

4.7%

YoY rent change

-3.3 POINTS

yoy occupancy change

18 YTD

individual transactions

Supply & Demand

2Q23

1,171 Units

QUARTERLY DEMAND
YTD: 1,149

1,833 Units

QUARTERLY COMPLETIONS
YTD: 3,080

Annual Demand vs Completions

2018
6,842
5,622
2019
5,708
5,520
2020
5,041
5,812
2021
10,762
4,760
2022
-5,122
2,832
2023 YTD
1,149
3,080
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • Q2 2023 saw the San Antonio apartment market registering a net demand of 1,171 units, a figure that was unfortunately surpassed by the concurrent delivery of 1,833 units. However, it wasn't all gloomy, as the positive absorption this quarter successfully ended the preceding four quarters' trend of negative absorption, providing a silver lining for apartment operators.

  • On the submarket level, only two of San Antonio's 14 regions recorded negative absorption this quarter. The Medical Center and Northwest San Antonio submarkets experienced net move-outs of 192 and 140 units respectively, marking a slight dip in their performance.

Completion Trends

  • By the close of Q2 2023, the San Antonio-New Braunfels market saw a measured influx of new apartment completions with a delivery of 4,494 units, leading to a 2.1% boost in the local housing inventory.

  • Looking at the last five years, the annual addition of new units averaged around 4,965, contributing to an average inventory growth of 2.3%. The submarkets of Far Northwest, Far North Central, and Central San Antonio played a significant role, garnering 47% of the total completions.

Demand Outlook

  • The forthcoming surge in new supply, with over 10,000 new units expected in the next four quarters, presents the biggest challenge for the San Antonio market.

  • Despite this, demand projections remain optimistic. Anticipated to either match or slightly surpass the record supply in the coming year, demand is particularly expected to remain strong in northern suburbs with high construction activity, like Far Northwest San Antonio and New Braunfels/Schertz/Universal City.

New Supply Outlook

  • By the end of Q2 2023, the San Antonio market had a significant 17,069 units under construction, with 10,233 of these units anticipated to be completed within the next four quarters – a historic high for the market.

  • The wave of scheduled deliveries in the coming year will mainly hit Far Northwest San Antonio, New Braunfels/Schertz/Universal City, and Central San Antonio, pressuring operators to maintain occupancy in these areas.

Demand Trends

  • Q2 2023 saw the San Antonio apartment market registering a net demand of 1,171 units, a figure that was unfortunately surpassed by the concurrent delivery of 1,833 units. However, it wasn't all gloomy, as the positive absorption this quarter successfully ended the preceding four quarters' trend of negative absorption, providing a silver lining for apartment operators.

  • On the submarket level, only two of San Antonio's 14 regions recorded negative absorption this quarter. The Medical Center and Northwest San Antonio submarkets experienced net move-outs of 192 and 140 units respectively, marking a slight dip in their performance.

Completion Trends

  • By the close of Q2 2023, the San Antonio-New Braunfels market saw a measured influx of new apartment completions with a delivery of 4,494 units, leading to a 2.1% boost in the local housing inventory.

  • Looking at the last five years, the annual addition of new units averaged around 4,965, contributing to an average inventory growth of 2.3%. The submarkets of Far Northwest, Far North Central, and Central San Antonio played a significant role, garnering 47% of the total completions.

Demand Outlook

  • The forthcoming surge in new supply, with over 10,000 new units expected in the next four quarters, presents the biggest challenge for the San Antonio market.

  • Despite this, demand projections remain optimistic. Anticipated to either match or slightly surpass the record supply in the coming year, demand is particularly expected to remain strong in northern suburbs with high construction activity, like Far Northwest San Antonio and New Braunfels/Schertz/Universal City.

New Supply Outlook

  • By the end of Q2 2023, the San Antonio market had a significant 17,069 units under construction, with 10,233 of these units anticipated to be completed within the next four quarters – a historic high for the market.

  • The wave of scheduled deliveries in the coming year will mainly hit Far Northwest San Antonio, New Braunfels/Schertz/Universal City, and Central San Antonio, pressuring operators to maintain occupancy in these areas.

Occupancy & Rent Trends

click to enlarge graph

RENT VS OWN
MONTHLY PAYMENT

$2,734

Average Monthly Mortgage Payment*

* The Average mortgage payment is based off a median home sales price of $324750 as reported by the San Antonio Association of Realtors as of May 2023.

$1,272

Average Monthly Rent

Occupancy trends

As the second quarter of 2023 unfolded, the apartment market in the San Antonio-New Braunfels region found itself wrestling with a minor decrease in occupancy levels. The market’s occupancy rate descended to 92.3%, marking a 20-basis point fall from the preceding quarter. This marginal downward shift, however, did not paint the whole picture of the complex dynamics at play within this diverse market.

Zooming into the submarket level provides a lens through which to view the dynamic trends shaping the San Antonio-New Braunfels apartment market. Far North Central San Antonio and Central San Antonio emerged as leaders in the occupancy this quarter. This hints at a renter preference for the heart of San Antonio, likely driven by the convenience of being in close proximity to essential amenities and employers. In the case of Far North Central San Antonio, its strong occupancy rate could also reflect its strategic positioning between San Antonio and Austin, offering tenants the best of both vibrant cities.

RENTAL TRENDS

Over the last five years, the San Antonio-New Braunfels region has experienced dramatic shifts in rent growth, ranging from a 1.0% decline to a 16.1% upswing. As the second quarter drew to a close, rents for new leases rose by a modest 0.4%, trailing behind the market’s five-year average annual increase of 4.9%. Amid the influx of new apartment stock, rent growth for Class A units stagnated, recording a zero percent change year-over-year, as operators prioritize maintain occupancy in the current climate. In contrast, the more budget-friendly Class C sector demonstrated a 3.0% increase, marking the third quarter in a row this segment has outperformed its Class A and B counterparts.

Examining San Antonio’s submarkets, Northeast and West San Antonio led the pack in rent change over the past year, recording increases of 3.5% and 3.0%, respectively. In stark contrast, the Far Northwest submarket experienced a rent contraction of 2.9% in the second quarter.

Submarket Rent & Occupancy

SubmarketAverage OccupancyAnnual Occupancy ChangeAverage Monthly RentAnnual Rent Change
Central San Antonio93.5%-1.5%$1,5180.3%
Alamo Heights92.4%-3.7%$1,493-0.9%
South San Antonio91.5%-3.1%$1,1071.9%
Southwest San Antonio90.5%-4.5%$1,098-0.1%
West San Antonio92.0%-3.3%$1,0303.0%
Medical Center91.4%-4.0%$1,1651.3%
Northwest San Antonio92.1%-3.2%$1,1821.5%
Airport Area91.9%-3.1%$1,1200.7%
North Central San Antonio92.9%-3.6%$1,2890.0%
Northeast San Antonio92.2%-3.8%$1,1413.5%
Far West San Antonio92.5%-3.1%$1,306-1.0%
Far Northwest San Antonio92.6%-2.8%$1,485-2.9%
Far North Central San Antonio93.6%-2.8%$1,4871.3%
New Braunfels/Schertz/Universal City92.7%-3.7%$1,3470.3%

Units by Submarket Delivering in 2023

17,069

Units Under Construction

10,233

Units UC Delivering In the Next 4 Quarters

Units Under Construction

Central San Antonio - 1,780
0%
Alamo Heights - 82
0%
South San Antonio - 1,878
0%
Southwest San Antonio - 1,133
0%
West San Antonio - 324
0%
Medical Center - 272
0%
Northwest San Antonio - 651
0%
Airport Area - 0
0%
North Central San Antonio - 1,303
0%
Northeast San Antonio - 506
0%
Far West San Antonio - 1,427
0%
Far Northwest San Antonio - 3,731
0%
Far North Central San Antonio - 420
0%
New Braunfels/Schertz/Universal City - 3,562
0%

Units Delivering Next 4Q

Central San Antonio - 1,338
0%
Alamo Heights - 0
0%
South San Antonio - 930
0%
Southwest San Antonio - 984
0%
West San Antonio - 225
0%
Medical Center - 225
0%
Northwest San Antonio - 315
0%
Airport Area - 0
0%
North Central San Antonio - 625
0%
Northeast San Antonio - 419
0%
Far West San Antonio - 330
0%
Far Northwest San Antonio - 2,561
0%
Far North Central San Antonio - 300
0%
New Braunfels/Schertz/Universal City - 1,899
0%

Sales Activity

So far this year, the San Antonio-New Braunfels market has seen the transaction volume for individual multifamily property sales dramatically contract to about $473.4 million, a sizable reduction representing a 73% YoY decline. At the same time, the number of transactions has seen a reduction of 46 compared to the same period last year, with only 18 apartment properties changing hands since January. Despite these downward trends, unit prices have witnessed a 20% annual hike, reaching around $157,500. However, this figure falls below the average prices in the South region ($202,600) and the U.S. ($225,200), suggesting potential investment opportunities in San Antonio-New Braunfels due to its relative affordability.

  1. SPI Advisory
  2. River Rock Capital
  3. Harbor Group Int’l
  4. DB Cap Mgmt
  5. Ilan Investments
  1. Fortress
  2. GV&A RE Investments
  3. Shippy Multifamily Group
  4. NRP Group
  5. Cambridge Dev Group

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change

  • 10 YTD

Individual Transaction Count


Price Per Unit


Annual Price Change

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual transaction $2.5M +

Economy

According to preliminary data from the Bureau of Labor Statistics, the unemployment rate in St. Louis was 3.0% in May, below the U.S. average of 3.5%. Over the course of the previous year, employment in the metro expanded by 1.4%, equating to an increase of 18,500 positions. The leisure and hospitality sector witnessed the most significant growth, adding 10,800 new jobs, a rise of 7.5%. This was closely followed by the education and health services sector, which added 5,300 new roles.

16.2k

May Annual Jobs Created

1.4%

May 23 Employment growth

3.0%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

<br>Leisure & Hospitality

Change from May 2022
to May 2023: 10,800

Percent Change: 7.5%

<br>Education & Health Services

Change from May 2022
to May 2023: 5,300

Percent Change: 2.0%

<br>Manufacturing

Change from May 2022
to May 2023: 2,700

Percent Change: 2.3%

<br>Government

Change from May 2022
to May 2023: 2,500

Percent Change: 1.6%

<br>Professional & Business Services

Change from May 2022
to May 2023: 2,300

Percent Change: 1.0%

Hover over circles to view data
SectorChange from May 2022 to May 2023 Percent Change
Leisure and hospitality10,8007.5%
Education and health services5,3002.0%
Manufacturing2,7002.3%
Government2,5001.6%
Professional and business services2,3001.0%
Other services1,5002.8%
Trade, transportation, and utilities4000.2%
Information-400-1.4%
Financial activities-1,500-1.5%
Mining, logging, and construction-5,100-6.8%

Economy

As of May 2023, the San Antonio region showcased impressive labor market resilience, as per data from the Bureau of Labor Statistics (BLS). Total nonfarm employment reached an impressive count of 1.17 million jobs, translating to a robust year-on-year growth of 4.6%. Various sectors contributed to this growth. The leisure and hospitality sector led the way, adding nearly 11,000 new jobs. Following closely was the professional and business services sector, with an additional 7,200 new jobs. Other significant job growth contributors included the government sector, growing at 4.4%, and the trade, transportation, and utilities sector, which expanded by 3.3%. San Antonio’s unemployment rate in May 2023 stood at 3.8%, slightly above the national average of 3.4%. Nonetheless, with consistent growth across all job sectors, the city continues to exemplify a robust and thriving economy.

51.7k

May Annual Jobs Created

4.6%

May 23 Employment growth

3.8%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

leisure & hospitality services

leisure & hospitality services

Change from May 2022 to May 2023:
10,900

Percent Change:
8.0%

government

government

Change from May 2022 to May 2023:
7,700

Percent Change:
4.4%

professional & business services

professional & business services

Change from May 2022 to May 2023:
7,200

Percent Change:
4.5%

trade, transportation & utilities

trade, transportation & utilities

Change from May 2022 to May 2023:
6,600

Percent Change:
3.3%

education & health services

education & health services

Change from May 2022 to May 2023:
6,400

Percent Change:
3.8%

Hover over icons to view data
Tap icons to view data
SectorChange from May 2022 to May 2023 Percent Change
Leisure and hospitality10,900 8.0%
Government7,700 4.4%
Professional and business services7,200 4.5%
Trade, transportation, and utilities6,600 3.3%
Education and health services6,400 3.8%
Financial activities5,300 5.4%
Other services2,000 5.2%
Manufacturing1,100 1.9%
Mining, logging, and construction700 10.8%
Information700 3.8%

Major Economic Developments

bakery, baking, bread factory

FGF Brands to Invest Over $129M

$129M+ Total Investment

600 New Positions

West Side of San Antonio Location

white Toyota crew cab pickup truck on ground

$400M Toyota Assembly Plant Expansion

40,000 Jobs over 10 years

1,500 High-paying jobs retained

$400M Investment

Civic Park Project to Create 6k Jobs

$880M Investment

6,141 New jobs created

300k SF of office, retail and hotel space

Market Outlook

The San Antonio apartment market could face some headwinds as cooling demand in the short term may present challenges. Despite this, the city’s stable employment foundation across various sectors such as healthcare, government, military, and aerospace manufacturing is expected to soften any major impacts. For the remainder of 2023, the market is projected to experience a slowdown in both occupancy and rent change. However, these metrics are expected to gradually stabilize, aligning closer to long-term averages by 2024 and beyond. Notably, occupancy rates in San Antonio have traditionally been lower than the national average, a trend that is anticipated to persist in the forecast outlook. This lag underscores the unique dynamics of the local market and the need for tailored strategies for real estate investors operating in the region.

Sources: RealPage; BLS; MSCI; San Antonio Business Journal; Greater SATX

To Gain Further Insights Into The San Antonio Market Please Reach Out To Our local Team

Image of Mike Watson

Michael Watson

Managing Director

Michael Moffitt

Managing Director

Mark Diebold

Senior Director

Image of Tyler Salter

Tyler Salter

Associate Advisor

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