San Antonio Lures Investors
Demand for apartments is expected to remain high as more residents move south to avoid the rising cost of housing in Austin.
By Anca Gagiuc
San Antonio rent evolution, click to enlarge
San Antonio has a diversified economy and employment is growing in most industries. That has fueled demand for apartments, which is expected to remain high as the metro continues to add jobs and households at a rate above the national trend, and as more residents move south to avoid the growing cost of housing in Austin.
Driving the economy are education and health services; professional and business services; and trade, transportation and utilities. While employment growth cooled off after the drop in energy prices in 2015, the metro continued to add jobs above the national rate. San Antonio’s office market saw its best year since 2006, with 1.3 million square feet of positive net absorption in 2016.
Rents increased 1.9 percent year-over-year through April, while occupancy for stabilized properties reached 92.6 percent as of March. Apartment construction marked a new high in 2016, with developers delivering 6,600 new units, a 3.7 percent increase in inventory. Furthermore, there were 8,000 units under construction as of April. Transaction volume surpassed the $1 billion mark for the second consecutive year, with value-add projects seeing the strongest interest from investors pursuing higher yields. Yardi Matrix forecasts rent growth to be on par with the 2016 rate, keeping rent appreciation to 2.0 percent for 2017.
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