Culebra Commons in San Antonio

Q&A With David Lynd of Lynd Cos.: Inflation Hits Middle-Income Renters Hardest, San Antonio Adjusts to Oversupply

by Channing Hamilton

Concerns of oversupply have risen regarding several Texas markets, including Dallas and Austin. Where does San Antonio stand in terms of supply and demand, and where in the city is there still room for new opportunities? Multifamily & Affordable Housing Business (MAHB) recently interviewed David Lynd, CEO of Lynd Cos., about the state of the market.

Multifamily & Affordable Housing Business: How many units do you currently own nationwide? How many in San Antonio?

Lynd: We own about 3,000 units in San Antonio and 6,000 nationwide. We also do third-party management and operate about 20,000 units across five states.

MFAHB: What does the San Antonio market look like in terms of supply currently? Is supply scaling appropriately with demand?

Lynd: There are about 12,000 to 15,000 units currently in development in the city, depending on which data source you’re referencing. It definitely seems like a lot of units. However, that’s partly because we’ve seen a lot of population movement into San Antonio from areas like the Austin metropolitan area over the past couple of years. 

Regarding potential oversupply, I think there’s going to be winners and losers. A project’s success is going to come down to its location. Is your development located someplace where people want to be? The projects in those growing submarkets are going to be successful. 

MFAHB: What submarkets are those?

Lynd: I think the submarkets that are going to see a lot of success are the Pearl District and the area around Broadway Avenue downtown. Those neighborhoods have the infrastructure for that sort of live-work-play environment that people are looking for here in the city. Both areas are known for their variety of restaurants, bars, coffee shops, retail and other entertainment options.

And then you have areas like Castroville, on San Antonio’s west side, where Microsoft is building a 153,000-square-foot data center outside Loop 1604 (the outer highway encircling San Antonio). That region is seeing tremendous growth because of the data centers that are cropping up.

MFAHB: What’s your company’s growth strategy when it comes to San Antonio?

Lynd: At the end of the day, when you look at all the different product types that exist out there, affordable housing is clearly the one that’s underserved the most. That’s the segment of the market that we’d really like to lean into. If we can add an affordable housing deal, we’ll do it. However, the numbers need to work out. It has to be a project that’s built in the right area for the right reasons.

Lynd Cos. has delivered three developments with an affordable component in San Antonio, so far. We recently completed The Josephine, a 261-unit mixed-use community in the Pearl District. That project has an affordable component to it, with some units being offered to tenants making about 80 percent of the area median income.

We also recently purchased Culebra Commons, a 327-unit community on San Antonio’s far west side. About half of those units are set aside as affordable housing. And then our project, Potranco Commons, has an affordable component as well.

We’re a big believer in adding affordability when you can, and we feel that with a lot of projects, introducing an affordable component makes a lot of sense.

MFAHBWhat are your predictions for 2024?

Lynd: We need to be very careful. The Federal Reserve has done everything that it said it would do, even when it has increased rates. So, you’ve got to take The Fed at its word. The Fed has signaled it’s going to cut rates. And I think that it should.

The people I feel most empathy for right now are the consumers. I run 20,000 apartment units, and I see what’s happening to people on the ground level, struggling to pay their rent every day. Inflation is killing people, especially people in the middle-income to low-income brackets. This market is an absolute travesty for them. So, I hope that we get some relief and interest rates drop, mainly to give the consumer relief.

Everything that I know about the world tells me that rates are going to come down. We’re in an election year, the market is teetering on potentially going into a recession and the unemployment rates are a little different than everybody believed.

But at the end of the day, I think the next year is going to be one that’s better than last year. The markets are going to start to normalize. Hopefully, rates are going to start to come down, as well, and we’ll start to gravitate back to around 5 to 6 percent interest rates, which is something the market can and should be able to handle.

David Lynd is the president and CEO of Lynd Cos., a development, investment and asset management company headquartered in San Antonio. Lynd Cos. was founded in 1980 and currently operates in 11 states and approximately 34 cities.

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