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San Antonio Multifamily: Look for Market to SoftenSan Antonio Multifamily: Look for Market to Softenhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=102352015-04-10T10:31:00Z2015-04-10T00:00:00Z

SAN ANTONIO (Marcus & Millichap) – In its first quarter 2015 apartment market report, Marcus & Millichap says the city's apartment market will soften some throughout the remainder of the year as builders accelerate projects and low oil prices create some economic uncertainty.

"Though direct exposure to the oil price reduction remains limited, the metro’s economy will be impacted somewhat nonetheless," the report said. "Job growth will be largely dependent on non-energy-related sectors such as healthcare, education, and professional and business services this year.

"Thousands of professional-level positions will be created in the metro's north/northwest region, where a sizable portion of this year’s deliveries are scheduled to come online. Many young professionals are moving into the metro as job openings and hirings increase, creating demand for rental housing nearby. While for-sale housing remains affordable, most of these young adults will stay in rentals, particularly in live-work-play neighborhoods where the cost of ownership is typically more expensive than the metro median-priced home. Softening in the market should be short term as deliveries decline drastically after this year and demand has the chance to catch up with the influx of new supply.

"Investor interest in the San Antonio market will remain strong through the year, though some will approach with caution. Deliveries will stay elevated this year as developers empty pipelines and rent growth will slow dramatically from previous years. However, completions will fall sharply in 2016, making way for possible significant operational improvements as rental supply stabilizes.

"Most sales in the metro were concentrated above $20 million as public REITs made their entrance into the market last year, although private and institutional investors dominated deal flow. Cap rates for large properties averaged in the low- to mid-5 percent range and should remain stable throughout the year. Meanwhile, value-add prospects will remain in high demand, and the market’s history of absorbing large influxes of supply will ease investors' concerns."

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