San Antonio multifamily leaps, bounds into 2016

​​SAN ANTONIO – The strides San Antonio’s apartment market
made last year are expected to get even longer in 2016, with continued job
growth and attractive demographics bolstering new residential development,
increased rental rates, investor interest and leasing activity.​

According to Institutional Property Advisor’s latest
apartment research report, the city’s diverse economy and employment base will
continue to attract young professionals that favor renting over buying a home,
which will continue to support San Antonio’s fast-growing multifamily stock.

The younger tenant base will also spur new developments in
walkable, dense environments that focus just as much on the surrounding
lifestyle amenities as the in-unit ones, such as biking routes, food trucks,
shorter commutes and farmers’ markets.

The report states that companies will add 30,500 jobs this
year, which will add even more pressure to the demand for apartments in the
metro.

Compounded with the drop in multifamily permitting and
construction starts — down 76 percent and 70 percent, respectively, compared to
year-end 2014 as developers begin to scale back new projects — the citywide
vacancy rate will likely go down even further.

Since 2000, vacancy at apartments has tightened below 5
percent, with the number of those properties offering concessions dropping to 3
percent from 14 percent just a year ago.

Rent growth in North San Antonio will continue to lead the
citywide average, especially in pockets such as the Northwestern submarket and
Stone Oak. However, that focus may shift to San Antonio’s city center once the
Cellars at Pearl development comes online, a milestone the area is expecting to
hit later this year.

Rents in the luxury development will be the highest in the
city, and if successful, will push other developers to follow suit with
similarly upscale, high-rise projects.

With four of San Antonio’s submarkets already topping $1,000
per month in rents, watch for the citywide average — now a bit higher than $900
a month — to come closer to flirting with that four-digit figure.

Last year’s growth set San Antonio’s apartment
market up for a successful 2016, so now the question that’s left is how much
higher the market will climb.