San Antonio’s apartment market has seen the addition of 9,000 new units so far in 2024, and another 6,000 are expected by year’s end, according to MRI ApartmentData. The oversupply of new apartments is leading to slow absorption and declining occupancy rates. Rental prices have also struggled, with experts predicting a 1% decline this year. Although the market is expected to stabilize with 3% growth by 2025, slow absorption and lagging rent increases are likely to continue over the next couple of years.

San Antonio Apartment Market Faces Slow Absorption and Rent Growth

San Antonio’s apartment market is experiencing a significant influx of new units in 2024, with 9,000 new apartments delivered so far this year, according to MRI ApartmentData, which tracks multifamily trends across the Sun Belt. An additional 6,000 units are expected to hit the market by the end of the year, putting pressure on occupancy rates and rental prices.

Oversupply Outpacing Demand

While the construction boom is not unprecedented compared to the peaks of the 1970s and 1980s, the current number of deliveries far exceeds what the market can absorb in the short term. Bruce Mcclenny, industry principal with MRI ApartmentData, notes that the pace of new apartment deliveries in 2024 is significantly higher than the Alamo City has seen in recent years.

“We’re likely going to deliver way more apartment units than we’re going to be able to absorb this year,” Mcclenny stated.

Occupancy and Rental Rates Declining

The slow absorption of these new units is driving down occupancy rates across the city. This, combined with a high supply, has led to a dip in rental prices. Mcclenny forecasts a 1% decline in rental rates for 2024, although the summer move-in season saw some temporary improvement.

Looking ahead, Mcclenny anticipates that the pace of new apartment deliveries will slow down, with around 8,000 units expected in 2025, and even fewer in 2026. As the supply moderates, he predicts rental prices will begin to rise again, with a projected 3% growth in 2025.

The Bottom Line

Despite the challenges facing the apartment market, there are signs that conditions could improve over the next couple of years as the rate of new construction slows and the market begins to absorb the excess supply. For now, however, San Antonio renters and landlords alike will likely continue to face soft occupancy and rental rates through 2025.

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