I New Supply Pressure

In many markets around the country – particularly those in growth regions such as the Mountain West, Lower Atlantic, and Texas –years of robust and consistent in-migration has led to significantly expanded multifamily construction pipelines. Areas like Raleigh-Durham, Orlando, Nashville, Phoenix, and Boise to name just a few are set to see something of a deluge of new units in 2023 and into 2024 relative to their long-term averages for deliveries.

Interestingly, Texas is currently something of an exception among these regions. Typically a very active state for new development, Texas has taken a fortuitously timed small step back at a time when apartment demand remains tepid at best.

The Greater San Antonio region has, unfortunately, not managed to side-step the broader downward trend in apartment demand. However, the new construction pipeline for the area, while undoubtedly larger than normal, fits the current Texas mold in that it is not quite as bloated as in many markets across these national growth regions.

Deliveries Have Moderated in Recent Years

The average for annual deliveries across the San Antonio region over the last five years stands at approximately 4,800 units. Even so, in 2021 and in 2022, new units introduced totaled less than 4,000 units. The most active years of the last five were 2018 and 2020 – periods in which around 6,000 new units were delivered in each.

Thanks to the explosive apartment demand of 2021, even after suffering a net loss of just more than 4,000 net leased units in 2022, only about 300 fewer units have been absorbed than added over the last five years. The glass half empty version of that stat, though, is that the market can no longer rely on the cushion of 2021 demand to make up for the subsequent (and continuing) shortfall.

Looking at the current pipeline, ALN is currently tracking roughly 9,700 units across the Greater San Antonio market that remain in a lease-up phase. The bulk of these, more than 7,000 units, are in a phase of the pipeline where construction is not yet entirely complete, but leasing is already underway. A further 2,600 units or so are currently in lease-up within properties that have completed construction already.

Taken together, these approximately 9,700 units represent the current new supply impact on the market. They do not include the units cur-