Job Growth in Key Industries Spurs Multifamily Renaissance in San Antonio
- May 30, 2013
With projects stemming from the Eagle Ford Shale and other industries fueling economic growth across the region, San Antonio is beginning to see job growth two percentage points higher than the national average. As such, vacancy is set to fall to 5.5 percent by the end of the year—the lowest rate since well before the recession.
Marcus & Millichap reports that employers are set to add 31,800 jobs in 2013, amounting to an annual growth rate of 3.6 percent. Much of the growth will be concentrated in the transportation, education and leisure and hospitality sectors, while companies such as Halliburton will also significantly expand operations.
Halliburton, the oilfield services company headquartered in Houston, recently announced it will complete construction of a 400,000-square-foot facility in the southern area of the metro and ultimately hire 1,500 new workers. Marcus & Millichap notes that 75 percent of the new positions will be local hires with salaries averaging $70,000.
As such, demand for apartments—Class A product in particular—is expected to grow substantially over the next year. While vacancy in the San Antonio metro has traditionally hovered well above the national average, Marcus & Millichap projects it will drop 130 basis points year-over-year between 2012 to 2013 to 5.5 percent—placing it just a tad higher than the U.S. overall.
Not surprisingly, in the face of such positive indicators, developers are continuing to ramp up activity—with 4,000 units slated for completion by the end of the year. Last year, a total of 3,650 units were delivered, and Marcus and Millichap notes that the sheer amount of units in the pipeline will likely expand overall inventory 19 percent when completed.
The Alamo Heights area continues to be the tightest submarket in the metro, with a 4.1 percent vacancy and rents topping $1,000 per month. The far northern submarkets are also seeing rates above $1,000, and Marcus & Millichap notes that local developers are taking note—with 1,400 units underway in the Far North Central area.
Overall rents will rise significantly this year—from an average of $799 per month to $834 per month—constituting a growth rate of 4.4 percent. This nearly mirrors the 4.2 percent growth rate seen last year, marking a stability in multifamily pricing that contrasts with fluctuating single-family growth rates over the last few years.
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