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Seattle Area Apartments Sustain Collection Losses

Research by Kidder Mathews shows the King County apartment market is indeed feeling the effects of the COVID-19 outbreak. The latest rent and occupancy trends report reveals sustained collection losses are being experienced across a survey of 44,000 properties.

Kidder Mathews’ multifamily investment team, led by Dylan Simon and Jerrid Anderson, write in their report, “First, news headlines certainly don’t tell the whole story, much less the real story, of how Seattle area apartment buildings are performing. Second, the apartment market is doing just fine – and certainly significantly better than nearly all other commercial real estate asset classes. Finally, we are in early innings of how the current pandemic will impact the broader economy, and specifically the Puget Sound Apartment market.”

Historically, troubles in economic markets first cascade in the form of declining rental rates. In the case of the current COVID-19 pandemic, the local apartment market is behaving – at least as of now – a bit differently. Rental rates remain steady, reports Kidder Mathews.

Rental rates, averaged across 44,000 units, started in January at $2.30-per-square-foot and as of April 15, 2020, have climbed a nominal 0.3% to $2.32-per-square-foot. The Simon and Anderson team agree 0.3% rental rate growth in just over three months is not good.

Occupancy in Kidder Mathews’ sample set of apartment units was 93% in January 2020, and as of April 15 had ticked up slightly to 93.1%. “We would expect occupancy rates to improve in spring months, and they did so marginally until April when the market responded to a post Stay Home, Stay Healthy environment,” writes Simon and Anderson, who expect to see greater vacancy in the market – “it’s just a matter of when and by how much.”

The percentage of rent collected – or rather, the percentage of rent not collected – is not the sexiest metric to track, especially in healthy markets, points out Simon and Anderson. “However, in times of economic softening (dare we say the “R” word – recession?), it’s time to dust off the old financial statement to recall “just how bad it got” last go-round,” they wrote.

This time is different – truly different, they say. Until at least June 4 of this year, renters cannot be evicted for non-payment of rent, nor can landlords assess late fees for non-payment, reports Kidder Mathews.

These circumstances, coupled with an unprecedented spike in unemployment, naturally lead to a huge uptick in collection loss. Accordingly, collection loss more than doubled from 2.9% in January to 6.6% as of April 15 in King County, reports Kidder Mathews. “To those reading local and national headlines, single-digit collection loss may not seem that bad – and it isn’t,” concludes Simon and Anderson.

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For comments, questions or concerns, please contact Dennis Kaiser


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About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

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