San Antonio Rents Drop as Vacancy Hits 16%

San Antonio apartment vacancy has reached 16%, driving rents down 2% to 3.5%. This represents a sharp reversal from 2022, when vacancy stood at just 6.9%. Landlords are now offering concessions to fill units.

The market has entered a hypersupply phase. Between 13,000 and 14,000 new units were completed in 2024. This surge has shifted leverage to tenants, according to data from GN auto markets/housing: rental market.

Supply surge drives tenant leverage

Investors poured capital into Texas housing from 2022 to 2024. The city’s $150 million Affordable Housing Bond also incentivized downtown development. Ryan Baldwin of the San Antonio Apartment Association confirmed delivery rates were among the highest in the US.

Pete Alanis of the San Antonio Housing Trust describes the current state as a real estate cycle peak. New buildings in prime locations are waiving deposits or offering free rent periods. This benefits renters but squeezes owner margins.

Construction slowdown threatens future supply

New construction has dropped significantly. Estimates suggest only 5,000 units will be built in 2026. This is less than half the volume of 2024. CoStar projects only 2,000 units will be completed in 2027.

Danny Khalil, director of market analytics at CoStar, warns of an impending supply cliff. He states demand will outpace supply by late next year. The market is expected to flip back toward landlords in 2027 or 2028.

Financial strain hits local landlords

Lower rents and high vacancy reduce cash flow for property managers. Baldwin notes this leads to delayed maintenance and reduced amenities. Smaller local landlords face the highest risk of insolvency or receivership.

Institutional investors can absorb losses and acquire distressed assets. Local operators lack this buffer. This disparity may accelerate consolidation in the local rental market.