San Antonio’s Apartment Market Hit by Surging New Deliveries and Rental Challenges

San Antonio’s Apartment Market Faces Staggering New Deliveries and Rental Challenges

San Antonio has recently found itself in the midst of a significant shift in its apartment market. The buzz in town is all about the astonishing number of new apartment units that have come online this year. As it stands, about 9,000 new apartment units have already been delivered since January, according to data from a specialized intelligence firm tracking multifamily statistics in our beloved Sun Belt region.

A Record Year for Deliveries

This isn’t just a casual uptick; it’s a remarkable situation that Bruce Mcclenny, an industry expert at MRI ApartmentData, says may not even hit record highs when we compare it to construction booms from decades past in San Antonio. However, he reassures us that this year’s figure is significantly higher than what they’re used to seeing in recent years. “We’re likely going to deliver way more apartment units than we’re going to be able to absorb this year,” Mcclenny mentions, painting a clear picture of the current market dynamics.

But hold on, the influx isn’t slowing down just yet. Before we close the books on 2023, it’s expected that another 6,000 units will hit the market, bringing the total for the year to around 15,000 new apartment units. That’s a lot of new living spaces, and while it’s great for some potential renters, the sheer volume is causing some headaches for landlords.

Occupancy Rates Take a Hit

With so many new properties available, it’s no surprise that the occupancy rate is feeling the squeeze. Right now, San Antonio’s occupancy rate is just shy of 86%, leading to what some landlords are calling “rental rate concessions.” This is just a fancy way of saying that landlords are offering discounts or perks to attract tenants, which means if you’re in the market for a new apartment, you might just find a sweet deal out there!

As if that wasn’t enough, we’re also seeing a steady decline in yearly rental rates. Although there was a little bump during the summer move-in season, Mcclenny anticipates a 1% drop in rental prices this year. However, there’s a hopeful outlook as we look toward 2025, where he predicts rental rates may rise back up by about 3% if the number of new deliveries begins to stabilize.

Job Market Impacts Apartment Absorption

But wait, there’s more! The job market plays a crucial role in this whole scenario.San Antonio has enjoyed a reputation for rapid job growth, but recent data shows we’re lagging behind our counterparts in Texas—except for Houston, which continues to thrive. This slower job growth could directly affect how quickly these new apartment units get leased up, which is a critical factor for landlords to consider.

As Mcclenny explains, “There are direct relationships between new jobs created and apartment units absorbed,” which means if people aren’t moving to San Antonio for work, they might not be looking to move into new apartments either. This combination of factors suggests that the issues we’re facing in the rental market may stretch well into 2026 before we see an improvement.

Final Thoughts

So, if you’re looking to rent in San Antonio, it’s a mixed bag of news. On one hand, there are more options than ever, which can be exciting and beneficial if you play your cards right. On the other hand, the current oversupply of units and declining occupancy rates might mean that the city’s rental landscape is a little rocky for the time being. Keep an eye out—there are deals to be had, but the state of the market may take some time to iron itself out.