“This was a very complex transaction with a few months of negotiations with the sellers, a large tenants-in-common group,” says Evan Goldenberg, principal at EBEX Holdings. “Ultimately, the effort was worth it, as we were able to close at a price-per-unit of $121,000. We have only owned Crescent at Alamo Heights for a month, but we are already hearing from tenants who are extremely excited about our rehabilitation plans, as the community has seen its share of deferred maintenance from previous owners.”

Joshua Ross, vice president investments in Marcus & Millichap's Encino office, represented AMAC Holdings and EBEX Holdings in the transaction. The sellers were represented by Ryan Epstein, senior managing director in Berkadia's Houston office, and Mike Miller, senior director at Berkadia's San Antonio office. United Apartment Group, a San Antonio-based property management firm led by principals Carrie Girgus and Tim Settles, will handle daily operations at the property.

Value-add options are highly sought after and draw strong buyer interest among local and out-of-state investors, while stabilized deals are also attractive and continue to entice interest. Overall, cap rates are in the high-6 to low-7% range, according to the report. Owners who purchased assets seven to 10 years ago may choose to bring properties to market as values have increased more than 20% above the previous peak. Upon sale, these investors will use the opportunity to redeploy capital and rebalance portfolios. Other owners may choose to place additional capital into properties to raise rents and boost NOIs. Central San Antonio and suburban locations including New Braunfels and Boerne are receiving strong buyer interest. Assets in these locations typically trade at first-year returns 100 basis points below the metro-wide average, GlobeSt.com learns.

The Marcus & Millichap report also indicates that vacancy continues to fall as construction pipeline thins. As supply additions begin 2017 at a slower pace than one year ago, rental housing demand remains strong, placing downward pressure on the vacancy rate. Much of the demand is occurring in the class-C segment, and vacancy here has compressed to 5.5% during the last year. Surging class-A completions, meanwhile, have softened vacancy among these assets, pushing up the rate to 9% in the first quarter. The use of concessions to lure tenants to these buildings has increased dramatically in the last four quarters as owners seek to stabilize new properties. Declining deliveries will bode well for these assets this year, allowing demand to catch up with supply. As a result, the metro will experience further tightening in the overall vacancy rate for a third consecutive year.

SAN ANTONIO—San Antonio's population continues to rise at a pace faster than the national rate of growth, especially among individuals between 20 and 34 years old, the prime renter cohort. Some of these individuals are moving to the market in search of jobs, and gains in service-related industries are boosting demand for apartments. As home prices continue to rise faster than incomes, these individuals will continue to favor apartments over homeownership, placing additional downward pressure on vacancy and encouraging rent gains. In addition, investors are targeting San Antonio apartment assets for higher yields as vacancy tightens and rents rise, according to the latest Marcus & Millichap San Antonio multifamily report.

An example of that type of investor interest was the recent acquisition of Crescent at Alamo Heights, a 306-unit multifamily apartment community located in the marquee neighborhood of Alamo Heights. A joint venture between AMAC Holdings and EBEX Holdings teamed up with property management firm United Apartment Group to acquire the community for $37 million. The new owners have plans for an extensive renovation and rebranding strategy that will include both interior and exterior improvements, as well as amenity upgrades.

“Crescent at Alamo Heights enjoys a prime location within one of the most desirable submarkets in San Antonio,” says Maurice Kaufman, a founding principal at AMAC Holdings. “The property has not been renovated in over 10 years and presents a tremendous value-add opportunity through unit upgrades and an operational overhaul.”

Built in 1993, Crescent at Alamo Heights sits on 14.6 landscaped acres and features a unit mix of one-, two- and three-bedroom units ranging from 669 to 1,370 square feet. The units include 9-foot ceiling heights, walk-in closets, washer/dryer connections and patios/balconies. Amenities include gated-access, assigned parking, a pet-friendly policy, swimming pool, fitness center, laundry room, playground, picnic area with barbecues and a business center.

“This was a very complex transaction with a few months of negotiations with the sellers, a large tenants-in-common group,” says Evan Goldenberg, principal at EBEX Holdings. “Ultimately, the effort was worth it, as we were able to close at a price-per-unit of $121,000. We have only owned Crescent at Alamo Heights for a month, but we are already hearing from tenants who are extremely excited about our rehabilitation plans, as the community has seen its share of deferred maintenance from previous owners.”

Joshua Ross, vice president investments in Marcus & Millichap's Encino office, represented AMAC Holdings and EBEX Holdings in the transaction. The sellers were represented by Ryan Epstein, senior managing director in Berkadia's Houston office, and Mike Miller, senior director at Berkadia's San Antonio office. United Apartment Group, a San Antonio-based property management firm led by principals Carrie Girgus and Tim Settles, will handle daily operations at the property.

Value-add options are highly sought after and draw strong buyer interest among local and out-of-state investors, while stabilized deals are also attractive and continue to entice interest. Overall, cap rates are in the high-6 to low-7% range, according to the report. Owners who purchased assets seven to 10 years ago may choose to bring properties to market as values have increased more than 20% above the previous peak. Upon sale, these investors will use the opportunity to redeploy capital and rebalance portfolios. Other owners may choose to place additional capital into properties to raise rents and boost NOIs. Central San Antonio and suburban locations including New Braunfels and Boerne are receiving strong buyer interest. Assets in these locations typically trade at first-year returns 100 basis points below the metro-wide average, GlobeSt.com learns.

The Marcus & Millichap report also indicates that vacancy continues to fall as construction pipeline thins. As supply additions begin 2017 at a slower pace than one year ago, rental housing demand remains strong, placing downward pressure on the vacancy rate. Much of the demand is occurring in the class-C segment, and vacancy here has compressed to 5.5% during the last year. Surging class-A completions, meanwhile, have softened vacancy among these assets, pushing up the rate to 9% in the first quarter. The use of concessions to lure tenants to these buildings has increased dramatically in the last four quarters as owners seek to stabilize new properties. Declining deliveries will bode well for these assets this year, allowing demand to catch up with supply. As a result, the metro will experience further tightening in the overall vacancy rate for a third consecutive year.