As one of Texas’s fastest-growing metros, San Antonio attracts commercial real estate investors and tenants nationwide with its plentiful undeveloped land and promising cap rates. The development-friendly metro area is home to millions, with nearly 70 people arriving in the city daily. Crexi is thrilled to connect individuals interested in San Antonio commercial property with the tools they need to research, analyze, and acquire San Antonio investment assets.
San Antonio is ranked by the National Association of Realtors (NAR) as one of the top 10 “hidden gem” housing markets for 2022. San Antonio sits at the southwestern corner of the Texas Triangle, an urban megaregion consisting of the San Antonio, Austin, and New Braunfels metropolitan areas. The economy in the region is as diverse as the city is old, with the manufacturing, military and defense, health care, financial services, and oil and gas sectors helping to keep job growth strong and rental property in demand.
San Antonio posted healthy multifamily fundamentals going into the second quarter, supported by its economic recovery and robust demographic expansion. Rates rose 0.7 percent on a trailing-three-month basis through March, to $1,247, while occupancy climbed 170 basis points in the 12 months ending in February, to 95.1 percent.
Population Growth
San Antonio is one of the top 10 major metros with the biggest population gains between 2010 and 2020. According to CultureMap San Antonio, the metropolitan area ranks #7 in terms of population growth over the past decade, just behind Austin, Houston, and Dallas-Fort Worth.
The truth is that Alamo City has been booming for quite some time. As local news station KENS 5 reported back in 2020, people from all over the country are moving to San Antonio, attracted by the area’s low tax rates and low cost of living. In fact, an average of 66 people are moving to the metropolitan area each day, which is why San Antonio is one of the fastest-growing cities in the U.S.
Key Population Stats:
The city of San Antonio is home to more than 1.4 million residents with nearly 2.6 million people living in the metropolitan area. According to the U.S. Census Bureau, San Antonio added over 107,000 residents in the past 10 years. San Antonio is the 2nd most populated city in Texas and the Southern U.S.
San Antonio-New Braunfels metropolitan area consists of Bexar County (where San Antonio is located), Medina and Comal counties. Bexar County is projected to be one of the five fastest-growing counties in Texas, with more than 1.6 million new people moving to the area by 2050.
Employment
San Antonio is becoming known as a center for high-tech employment, with tech force migration into the metro area increasing by 24% year over year. Over the past several years, San Antonio has focused on supporting the growth and development of the regional tech center. Today, nearly 47% of the high-wage jobs in the economic development pipeline are in the IT and cyber operations sectors.
As the Federal Reserve Bank of Dallas notes, economic indicators in San Antonio are largely positive. The business cycle index accelerated, jobs are being added at a steady pace, and unemployment is lower than in Texas overall.
Key Employment Stats:
The GDP of San Antonio-New Braunfels MSA is over $132.1 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 58% since 2010. Job growth in San Antonio was 3.1% between December 2020 and November 2021, according to the Federal Reserve Bank of Dallas. Median household incomes have increased by 8.67% year-over-year, while property values have grown by 8.57%. The unemployment rate in San Antonio is currently 3.3% (as of April 2022) and prior to the recession was approaching a 20-year low.
Target industry sectors in San Antonio include information technology and cybersecurity, new energy, life science and healthcare, aerospace and aviation, military and defense, financial services, and advanced manufacturing. Port San Antonio is a 1,900-acre technology and innovation campus just southwest of Downtown San Antonio. H-E-B supermarket chain, financial services and insurance company USAA, Rackspace, CPS Energy, Toyota Motor Manufacturing, Valero Energy, and Clear Channel Communications are just a few of the companies with corporate headquarters in San Antonio.
Major employers in the San Antonio region include Lackland Air Force Base, Fort Sam Houston-U.S. Army Base, H-E-B, USAA, Methodist Healthcare System, City of San Antonio, Wells Fargo, JP Morgan Chase, and Bill Miller BBQ. The San Antonio area is home to 15 colleges and universities with a total student population of more than 160,000, including Texas State University, Texas A&M University-San Antonio, and the Alamo Community College District. Over 82% of San Antonio residents have a high school degree or higher, while nearly 27% hold a bachelor’s degree or advanced degree. Union Pacific Railroad provides freight rail service in San Antonio. San Antonio International Airport (SAT) provided service to more than 10.3 million passengers last year and moved more than 277 million pounds of air cargo, setting a 10-year record.
Housing
San Antonio Business Journal announced that San Antonio ranked 4th on Zillow Group Inc.’s list of the top hottest housing markets for 2022. Low mortgage rates, population growth, and new jobs will continue to contribute to our red-hot housing market in 2022. Homebuilders are actually having to slow play construction because of supply chain issues and labor shortages. These will eventually resolve themselves, but it will probably take at least a year and the effects will linger much longer. This has contributed to a boom in new construction of single-family rentals, which is a red-hot market for investment now, but they suffer the same issues with low lot availability and material shortages.
Real Estate
The San Antonio real estate market is predicted to outperform other Texas cities in 2022, with home prices predicted to rise by 3.5% by year-end. A couple of years ago, Curbed listed San Antonio as one of the top 5 cities where homes could make a good investment in 2020. Twenty-four months later, it looks like Curbed’s prediction of the San Antonio real estate market outperforming was right on target.
According to the San Antonio Board of Realtors (SABOR), the median price of a single-family home in San Antonio increased by 16% over the past year (as of May 2022) while the days on market are down to 27 versus 34 the same time last year.
Key Market Stats:
Zillow Home Value Index (ZHVI) for San Antonio is $298,626 through May 2022. Home values in San Antonio have increased 24.8% over the last year. Over the past five years, home values in San Antonio have increased by nearly 67%. The median listing price of homes in San Antonio is $295,000, according to the November 2021 data from Realtor.com.
Multifamily
San Antonio is an especially exciting area. Savvy real estate investors know better than to pass up these high-return properties and new urban developments. Developments that are maximizing the best city and suburban high-value locations.
The population is growing at an incredible rate as the business environment flourishes which translates into demand for dwellings. The multi-family residential real estate market is growing fast. The vast in-migration of affluent young professionals from across the country is driving rapid growth in the rental market. Not to mention higher returns based upon a demand for higher quality properties with the latest décor and amenities.
As the demand for dwellings grows, without enough supply to meet the current or future demand, there are investment opportunities. This shortage of supply indicates that the value proposition for commercial property will continue to look promising.
Multifamily vacancies in San Antonio have reached their lowest point since 2017, with apartment demand driven by a strengthening economy and improving market fundamentals. Asking rents are up 7.6% year-over-year, helping to push the sales price for apartment buildings in San Antonio higher.
Rent
Rent prices are rising in San Antonio, with the median rent for a 3-bedroom home increasing by 12% year-over-year. According to MYSA, rent hikes are due to a combination of factors, including relocation within the city, in-migration from other parts of Texas and the U.S., and a low supply of inventory.
San Antonio is known as one of the most stable markets for rental activity in the U.S., according to the San Antonio Business Journal. About 60% of the rental applications came from renters moving from somewhere else within the city.
The strong performance of the rental market in San Antonio is one reason why WalletHub ranks San Antonio as one of the best cities for renters. The report analyzed more than 180 rental markets using the same key measures real estate investors use, including activity in the real estate market, cost of living, and growth in the job market.
Key Market Stats:
The median rent in San Antonio is $1,779 for a 3-bedroom home, according to the most recent research from Zumper (June 2022). Rents in San Antonio have increased by 12% year-over-year. Over the past 3 years, rent for a 3-bedroom place in San Antonio has increased by about 26%. Renter-occupied households in San Antonio make up 39% of the total occupied housing units in the metropolitan area.
Most affordable neighborhoods in San Antonio for renters include Quintana, Salado Valley, and Sunny Slope where average rents are less than $900 per month. Most expensive neighborhoods in San Antonio for renters are Forest Crest, King William, and Downtown San Antonio where average rents range between $3,065 and $4,500 per month.
Price
Long-term real estate investors look for property that appreciates in value over time while generating consistent cash flow during the holding period. Analyzing the historic change in housing prices can provide an indication of potential future value increases, while the affordability of housing is one indicator of the demand for rental property.
The Housing Affordability Index (HAI) report is used to rank each market in the U.S. compared to a baseline HAI of 100. In markets where housing is unaffordable, the index may be near 100 or even less than 100. On the flip side, the higher a HAI is above 100, the more affordable a market is to purchase a home. When compiling the affordability index scores, researchers look at the median price of a single-family resale home and compare that cost to the median family income in the market.
Quality of Life
San Antonio is the place to be inspired, curious, hungry, and adventurous. The city is home to The Alamo, the San Antonio River Walk meanders through five miles of Downtown San Antonio, and SeaWorld and Six Flags Fiesta Texas are just a short car drive north of the city.
Key Quality of Life Stats:
Forbes ranked San Antonio 44th in the nation for job growth, the 48th best place for business and careers, and 55th for the cost of doing business. The cost of living in San Antonio is just 2% above the national average. WalletHub ranks the San Antonio metro area among the top best cities in the country for jobs. San Antonio receives a top grade from Niche.com with high scores for public schools, housing, and nightlife.
The metro area is ranked by U.S. News & World Report as the 83rd-best place to live and the 73rd-best place to retire in the country. CultureMap describes San Antonio as a place that “offers big-city amenities and world-renowned attractions coupled with a relaxed and inviting atmosphere.” The climate in San Antonio is a mixture of humid subtropical and semi-arid, with very long hot humid summers and mild to cool winters.
Kayaking at Confluence Park, visiting the Farmers Market in The Pearl District, and wandering through the La Villita Historic Arts Village are just a few of the cool things to do in San Antonio. Methodist Hospital-San Antonio and Baptist Medical Center are two of the best hospitals in San Antonio, Texas. The NBA 5-time world champion San Antonio Spurs play out of the AT&T Center on the east side of the city.
As informed investors we should understand the risks associated with real estate investing and that there is no guarantee. Please do your due diligence.
Is it a good time to buy or sell a home in San Antonio?
Both buying and selling a home in San Antonio can be a good option depending on individual circumstances. With the current strong seller’s market and high demand for housing, it may be a good time to sell. However, with low interest rates and affordable housing options, it may also be a good time to buy. It’s important to work with a knowledgeable real estate agent to make the best decision for your situation.
