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[SA] Apartment living getting more popular in S.A.; supply keeping up
Quote:
The multifamily lifestyle
Apartment living getting more popular in S.A.; supply keeping up
Web Posted: 12/21/2007 05:11 PM CST
Creighton A. Welch
Express-News Business Writer
This past year has proved to be another positive one for the multifamily market in San Antonio, as more people flock to the city and consider the apartment lifestyle. Even the apartment companies are moving here.
United Apartment Group, a Dallas-based apartment management company, likes San Antonio so much the company is moving its headquarters here from Dallas at the beginning of 2008.
"San Antonio's a big market for us," UAG President Tim Settles said. "San Antonio used to be one of those markets that was usually an afterthought. Now, everyone's seeing that San Antonio has been exceeding expectations."
UAG has 80 properties in its portfolio in Florida and Texas, with 25 in San Antonio. The company has 5,000 units in San Antonio and is adding more.
"The number of new projects has been off the charts," Settles said. "But I think San Antonio has managed to hold its own."
In 2006, about 6,000 new units opened in San Antonio; and this year, that number looks to be more like 7,000, said Steve Moore, vice president of multihousing with CB Richard Ellis. About 7,000 units are under construction, including affordable, student and senior housing.
And this construction is happening all across town. The north and northwest continue to see the most new apartments, but construction in the south is picking up, especially near the Toyota plant.
Despite the heavy volume, apartments don't seem to be in excess.
"We don't really have an overhang with new construction," Moore said.
Occupancy levels have remained about the same this year, at 92 percent.
And although the number of apartments continues to grow, apartments have become a more popular choice for many, which is keeping the rental prices from slowing down.
"We continue to see rents edge upwards," Moore said. "San Antonio is a fairly slow, but steady, market."
Average home prices in San Antonio have appreciated 7 percent this year, while apartment market prices have appreciated about 3 percent during 2007, according to Mario Gonzalez, vice president of development at Koontz McCombs. The average monthly rent in San Antonio is $661 a month, as of the end of the third quarter.
"Demand has had a positive effect on market performance, providing for steady rent growth and occupancy levels," Gonzalez said.
The rise of home prices may cause more residents to prefer the apartment path.
A spike in apartment demand also could come from people who cannot qualify for a home loan, or from those who have lost their houses. But that has not been a major issue in San Antonio, which hasn't been hit as hard by the housing slump, said Chris Ross, a broker specializing in apartment sales with Hendricks & Partners.
Ross believes the safest market for builders is midlevel complexes, which are new but might not have all the amenities, such as an Olympic-size swimming pool, fitness center or billiards room. If there's a slump, people will move out of the luxury apartments; and if there's a boom, people will move out of their low-level apartments, Ross said.
This midlevel apartment class makes up only about 15 percent of the overall market, though.
The new, luxury apartments make up another 15 percent and are making up most of the new construction.
And despite the new construction around San Antonio, CB Richard Ellis' Moore said most of San Antonio's multifamily market — about 70 percent — is existing, older units.
"That's really what drives this market," he said.
Another component of the San Antonio market is affordable housing.
The NRP Group, an Ohio-based real estate company, builds and manages mostly affordable housing complexes.
NRP Group manages several multifamily complexes in San Antonio, including Costa Valencia and San Juan Square, and is in the planning stages of a development on Cevallos Street in Southtown that could have 500 apartments and 20,000 square feet of retail space.
"(San Antonio) is a great place to find high-quality, affordable homes," said Ken Outcalt, acquisitions director with NRP Group. "San Antonio has the same economic job growth as the East Coast without the prices that you have on the East Coast."
Outcalt said one of his company's strategies is to build apartment complexes in areas that are just beginning a renaissance.
"I think a lot of our developments are catalysts for revitalizing neighborhoods," he said.
At UAG, the company believes in building apartments that run the gamut, including high-end luxury, affordable housing and senior independent living.
More than 80 million people were born between 1946 and 1964, the baby boomer years. And Texas is attracting more seniors than any other state except Florida.
"They're long overdue," Settles said about independent living units. "There's a wave coming, and we're pretty optimistic about that. They're pretty fun to manage."
Some people in the multifamily business think the trends will continue next year.
"I don't see it being much different than it was in 2007," Settles said. "I don't see any slippage."
Any slippage that does occur may be from tighter credit markets.
"We think there may be a bit of a slowdown in the investment market and probably in the new construction market," said CB Richard Ellis' Moore, who estimates 2008 new construction to be around 4,000 units.
Next year's market, though, is still up in the air for some.
"Although market fundamentals continue to go our way in the multifamily sector, the word 'inflation' is being used more and more," Gonzalez said. "2008 is anybody's guess at this point."
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Last edited by sirkingwilliam; Dec 23, 2007 at 8:10 PM.
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