Lumin, San Antonio, TX
We are thrilled to offer you an exclusive chance to collaborate with us on a groundbreaking project to develop 264 Class-A units in one of the most desirable markets in the country - San Antonio, TX. The West side of San Antonio, where Lumin is located, boasts the region's highest rent growth and absorption rates. We've identified this part of San Antonio specifically because it offers folks the best value in the market.
- Excellent highway access right on the corner of I-410 and US 90.
- Easy access to the medical district, downtown, the airport, and much more.
- Limited land to build thanks to the nearby military base.
- Unlimited retail within 5 minutes of the property.
- 4.7% YOY rent growth (we budgeted 3%).
We broke ground on this project last year and have completed about 20% of the development. We're at a critical point where we feel it makes sense to refinance out of the initial high-interest-rate loan that was close to 10% and have secured a traditional bank loan at 6.5%. This refinance is going to save our investors (and us) between $2-3MM in carry costs. We're also getting a more stable lender (regional bank), and we're de-leveraging the project. While leverage is good, in an environment like this, I feel it's a win-win to lower our interest cost and lower our leverage all while maintaining our overall return metrics.
I'm excited to see this project come to completion - and with our new VP of Development on board, it gives me further confidence that all the details will be properly followed up. The design and selections have, as you can see from the pictures and video, been mostly chosen and are ready to impress our future residents. I also believe our estimated time of completion will pair really well with a rebounding economy that will be in need of new units to meet the increased demand.
San Antonio continues to outperform with exceptional performance. Multifamily demand trends turned positive again this quarter with positive absorption ending the previous four quarters of slight negative absorption. This comes on the heels of 2021 and 2022 with demand outstripping supply by nearly a 2:1 ratio (completely insane). Twelve of the region's submarkets saw positive absorption in the second quarter. Overall deliveries helped increase the local housing inventory by 2.1%. Historically San Antonio has averaged 2.3% so we're still below average.
- Huge incentive to rent:
- $1,272/mo average rent across all asset classes
- $2,734/mo average mortgage payment
- 4.7% YOY rent growth
- Supply still short over 6,000 units!
- Demand 2021, 2022, YTD 2023: 17,033 units
- Supply 2021, 2022, YTD 2023: 10,672 units
- Most growth happening in Far Northwest and New Braunfels
Over the past 5 years, rental growth has been anywhere from 1% decline to 16% increase. The Northeast and West submarkets led the region in rental growth. I believe this is because demand was equally as high in these areas but there were fewer deliveries by developers. We specifically positioned this new 264-unit development project on the West side of town because we saw this imbalance and wanted to capitalize on the demand for housing where there was less interest from developers.
