San Antonio’s major industries have left the market largely insulated from the national recession, though apartment fundamentals are weakening due to modest job losses and a glut of new units, according to a fourth quarter Apartment Research Report by Marcus & Millichap.

The large presence of military and health care firms is offsetting employment cuts in other areas, which will help mitigate the rise in vacancy in the near term.

“After staggering through the first part of 2009, the investment market rebounded somewhat late in the second quarter, and preliminary results from the third quarter show signs of investment velocity rebounding,” says J. Michael Watson, regional manager of the San Antonio office of Marcus & Millichap.

Some of the most significant aspects of the San Antonio Apartment Research Report include:

• Though payroll expansion is projected to resume in the 4Q, a total of 6,300 jobs will be lost in the metro this year, a 0.7 percent decrease. In 2008, roughly 4,900 positions were added.
   
•  Builders are expected to complete 4,100 units in 2009, well above the metro area’s five-year average of 2,600 units annually. Last year, approximately 1,700 apartments were delivered.
   
• Supply-side pressure will be the major contributor to a 4Q increase in vacancy to 11.3 percent, a rate that is up 230 basis points annually. In 2008, vacancy climbed 240 basis points.
   
•  As occupancy continues to fall, asking rents will finish the year at $690 per month while effective rents are expected to hit $639 per month, declines of 1.6 percent and 3.3 percent, respectively, from year-end 2008.

For more information, visit Marcus & Millichap website.