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Puget Sound MF Rents Maintain Steady Growth Amidst Delivery of 60K+ Units This Cycle
Third-quarter rent and vacancy data, released by Kidder Mathews, shows continued healthy rental rate growth and sustained low vacancy rates for apartments in King, Snohomish, Pierce, and Kitsap counties. Not surprisingly, the biggest takeaway noted by the multifamily investment team led by Dylan Simon and Jerrid Anderson is that current average rents per unit are the highest in Urban King County at $2,055. Concurrently, these urban neighborhoods are balancing rental rate growth with vacancy maintaining in the 5% range.
Kidder Mathews’ Simon says, “When we’re analyzing rent and vacancy, the question is two-fold: how much has pricing increased while absorbing the delivery of new apartment units? In a market that used to supply about 3,500 units a year on average for the last 30 years, we’ve averaged about 10,000 units a year for the last several years.”
Among apartments located near Seattle’s urban core, sharp increases in property taxes and expenses force landlords’ hands to increase rental rates, and average rental rates are further pushed based on the delivery of new construction of primarily high-end product. Attention from both renters and investors is now trending suburban in the Puget Sound, which is fueled by expanding light rail access, urbanizing nodes, and investment from tech firms outside of the urban core, notes Kidder Mathews.
The Puget Sound is on the path to hit another peak in apartment sales in 2019. While this is partially driven by the excise tax increase effective January 2020 and interest rates dropping, one of the primary factors is that investors recognize that as the market cycle comes full term, Seattle remains a safe, stable, and profitable market.
*Pictured Daniels Create World Seattle, LLC’s The Emerald 40-story residential tower in downtown Seattle.
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