MARKET SNAPSHOT: Strong Employment, Mortgage Financing Woes Keep Apartment Demand High in San Antonio
By Philip Shea, Associate Editor
Employment in the San Antonio metro area increased by 1.2 percent in 2011, considerably higher than the 0.7 percent seen in 2010 and translating to the addition of 10,000 jobs. Combined with continued difficulty for many prospective first-time homeowners to obtain mortgages, apartment demand has soared—with rent growth coming in at 3.4 percent for last year.
Hendricks & Partners reports that 2011 saw 5,300 net move-ins, exponentially higher than the 1,911 units absorbed in 2010 and ranking as the highest annual total on record going back to 1996. However, absorption levels are expected to return to historic norms in 2012 and 2013, averaging around 2,500 units per year.
Even as rent growth hits an impressive peak, vacancy rates in metro are expected to trend slightly upward by 4.6 percent in 2013, this after falling from 5.2 percent to 4.3 percent between 2011 and 2012. This is due to new construction outpacing the incredibly high demand, with around 4,500 new units coming online by 2014.
Approximately 33,000 local jobs are expected to be in 2012 and 2013, with a large bulk of the growth coming from the energy sector. Hendricks & Partners reports that the 400-mile Eagle Ford Shale, a major source of oil and gas in the region, is expected to create over 68,000 Texas jobs throughout the decade, including 6,000 in Bexar County. It will also have a statewide economic output of $21.5 billion.
Another company expanding due to shale is Halliburton, which is building a 1,500-worker corporate campus in south San Antonio. Bexar County Judge Nelson Wolff was enthusiastic about the new project by the multi-billion-dollar company, saying in an interview with San Antonio Express-News that the addition of higher-paying jobs could boost the housing market.
“I think it’s going to help with housing,” says Wolff. “We’re already seeing interest in the higher-priced housing market.”
Indeed, Hendricks & Partners 2011 Review & 2012 Forecast for the region that strong economic growth will “enable more renters to enter the for-sale market, resulting in a leveling off in apartment demand.”
Regardless, the multifamily sector is expected to remain strong for the foreseeable future, and rents continue to increase across the metro area. The central/downtown submarket saw rates increase 5.9 percent between 2010 and 2011, from $644 to $682. Rents in other submarkets were even higher, with the New Braunfels/Sequin area posting the largest average of $821 in 2011. Average overall rent was $740 and is expected to surpass the $800 mark by 2013.
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