Puget Sound Multifamily 2020 Caps Not Far from Previous Years

Despite 2020 being defined by a global health crisis and market challenges, apartment sales in the Puget Sound region ended the year with cap rates not far off previous years, according to the 2021 Apartment Sales Market Study released by Dylan Simon and Jerrid Anderson of Kidder Mathews. Seattle and its urban neighborhoods retained a top spot as the most active sales markets, with 77 sales equating to nearly 35 percent of the region’s total transaction volume.

While the number of apartment transactions in urban markets plummeted to Great Recession levels, these markets were still the most actively traded in 2020. Pricing remained strong with cap rates largely unaffected by market turbulence. The last time these markets experienced this significant decline in transaction volume, cap rates rose 110 basis points, reducing the value of apartments in the region by roughly 20% overnight.

However, in 2020, Urban King County apartment sales averaged a 4.3% cap rate, the same as 2019. Reduced supply of available apartment investments resulted in strong demand from investors looking to take advantage of record-low interest rates. Although short-term fundamentals (rental rates, occupancy) weakened, sellers received fair pricing for well-operated properties, says the report.

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