Austin isn’t the only Central Texas dealing with an oversupply of apartments.
The San Antonio suburb Seguin has a small multifamily market, but a glut of units flooded the market and haven’t been absorbed, the San Antonio Business Journal reported.
Developers delivered 456 apartments last year, accounting for about a quarter of the region’s 1,755-unit total, according to CoStar. The absorption rate is in the black at 106 units, but the vacancy rate is 24 percent.
The spike in vacancies was fueled by the completion of two large apartment complexes. One 258-unit complex, which is 80 percent vacant, and another with 198 units and 63 percent vacancy.
New units often take time to fill, but Seguin’s high vacancy rate is notable for a town of only 36,000 people, said Daniel Khalil, an associate director at CoStar.
Unlike San Antonio, where renters frequently switch between apartments to find the best deal, Seguin struggles with limited tenant mobility despite the hundreds of new units coming online last year, the San Antonio Business Journal reported.
It’s possible that people who move to suburban Seguin wish to live in single-family homes, not apartments, Khalil said.
Meanwhile, oversupply has led to a renter’s market in San Antonio.
“What we’re seeing here in San Antonio is intense competition between apartment complexes. Tenants can hop between complexes to get the best rent,” Khalil told the outlet.
Multifamily developers went hard answering the post-pandemic demand for housing, and the market just hasn’t leveled out yet, Khalil said.
Only half of the 14,500 units delivered in San Antonio last year have been filled, causing average rents to drop by 5 percent. Austin experienced a 12.5 percent average rent decrease, as 36,000 new units were added but only 19,000 absorbed.
The oversupply of multifamily units Austin has led landlords to offer incentives. Over 70 percent of Class A apartments provided concessions over 10 percent, often including a month of free rent.
— Andrew Terrell
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