San Antonio’s Multifamily Investment Market Heats Up

SAN ANTONIO, TEXAS (September 30, 2021) - San Antonio’s rebounding economic drivers, growing population, robust renter demand and impressive rent growth are making the market a top pick for multifamily investors.

San Antonio’s booming target industries include the red-hot cybersecurity and information technology, life sciences and healthcare – key drivers for employment growth. Industrial and logistics, energy and banking also remain strong industries.

“We’ve seen a 10 percent year-over-year employment leap in higher-paying, white-collar jobs,” says Zar Haro, managing director of investment sales for NorthMarq's San Antonio office.

San Antonio, in particular, is a top U.S. hub for cybersecurity, driving a robust economic recovery. Cybersecurity will continue to benefit from the expansion of the downtown campus of the University of Texas, ranked the nation's top university for studying cybersecurity.

“San Antonio has always had strong anchor employers, and lenders looked to us for stability,” notes Bryan Leonard, managing director of debt and equity for NorthMarq’s San Antonio office. “However, these new industries driving the economy aren’t just providing good jobs, they’re fueling net migration and population growth, which is creating demand for housing.”


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San Antonio is one of the fastest-growing cities and attracts young people with its employment opportunities and affordability. Also, the surging single-family housing market triggered tight inventory and steep pricing, driving more people to rent.

To meet demand, apartment development has accelerated. “In the last 12 months, roughly 5,200 units were delivered, and the market absorbed 10,700 units – doubling demand,” Haro notes. Rent growth jumped an unprecedented 11 percent from 2020 to 2021.

These solid market fundamentals are boosting investment activity. “On the capital markets side, we’re as busy as ever,” Haro notes.

Transaction volume increased nearly 30 percent in the second quarter, and pricing rose 30 percent over 2020. Pricing trended between $83,000 and $115,000 per unit over the past decade. In the last year, 160 buildings traded at roughly $117,000 per unit. In the second quarter alone, trades were approximately $130,000 per unit. Haro says transactions totaled between $700 million and $800 million in the second quarter, nearly matching the total for all of 2019. “That kind of demand is pretty wild,” Haro adds.

Cap rate compression continues; it’s 4 percent to 4.5 compared to 5 percent to 5.5 percent in 2020.
Investors are flocking to the market. While it’s primarily private capital, more institutional players have mandates to increase their presence here.

Many lenders identified San Antonio as a preferred market. Approximately $2.3 billion in transactions were financed in 2020. “Eighty-five percent was by government agencies: 65 percent was Freddie Mac and Fannie Mae and 20 percent HUD. The remaining slivers were banks, insurance companies, and bridge or debt fund lenders,” Leonard notes.

With surging rent growth and demand, San Antonio is already at approximately $2.2 billion in financing volume and on track to finish roughly 25 percent higher than 2020. However, the composition of lenders is only 50 percent Freddie and Fannie, Leonard notes.

“So banks and bridge lenders have stepped in due to the rent growth and to support value-add acquisitions,” says Leonard.

Also, insurance companies are very interested in San Antonio and extremely competitive on low-leverage deals.
An abundance of capital remains available. “From the lending perspective, no one is turning off the faucet,” says Leonard.

A large supply of properties will become available, and rents will continue to grow very quickly, adds Haro. Cap rates will remain challenging, but investors are willing to take a less-than-ideal cap rate in exchange for hefty rent growth potential.

Northmarq is a full-service capital markets resource for commercial real estate investors, offering seamless collaboration with top experts in debt, equity, investment sales, loan servicing, and fund management. The company combines industry-leading capabilities with a flexible structure, enabling its national team of experienced professionals to create innovative solutions for clients. Northmarq's solid foundation and entrepreneurial approach have built an annual transaction volume of more than $39 billion and a loan servicing portfolio of more than $76 billion. Through the 2022 acquisition of Stan Johnson Company and Four Pillars Capital Markets, Northmarq established itself as a provider of opportunities across all major asset classes. For more information, visit: