What area is your expertise?
Multifamily Investments — Greater Seattle Area
What trends do you see presently in multifamily development in your area?
With vacancy rates below 5 percent in the greater Seattle area, we see continued rental rate growth, and continued demand for apartment rental units. In general, the number of apartment units is down, and more units in development for 2009 – 2011 will increase the unit count in the downtown areas.
Who are the active multifamily developers in your area?
Avalon, Lorig, SRM Development and SP Real Estate are some of the active multifamily developers with new projects underway.
Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?
Avalon’s new Avalon at Meydenbauer recently opened in downtown Bellevue adding over 350 units within walking distance to Bellevue Square and the new Lincoln Center. SRM Development is underway with 130 units being developed in Seattle in South Lake Union nearby Vulcan’s new developments, Amazon’s new Headquarters and the new Bill and Melinda Gates Foundation.
Where is the majority of development taking place? Why is this area doing well?
The majority of new development is occurring in and surrounding downtown Seattle and Bellevue. Downtown Bellevue is expanding, the new Lincoln Center opened adding retail, hotel, and residential, and several other new office, retail and residential projects all within walking distance. In Seattle, South Lake Union is rapidly changing with Paul Allen’s Vulcan developments, Amazon’s new headquarters, and the new Bill and Melinda Gates Foundation. The higher rents in these areas and zoning allow for more multifamily development, with higher density and close proximity to employment and retail centers.
What area do you expect to be the next big development market? Why?
Downtown Bellevue is rapidly changing with new retail, office, and residential development. Several apartment properties that were converted to condos in the past few years have left a shortage of apartment rental units in the area.
What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing?
The greater Seattle area in King and Snohomish counties show continued strong demand for apartment rentals and low vacancy rates.
Please give a measure of apartment vacancy rates.
In the Seattle area, the average vacancy rate is under 4.5 percent for stabilized apartment properties, and rents have increased on average over 9 percent in the past year.
What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year?
In 2008, we have seen some adjustment in pricing for multifamily investments, as the lending rates and cost of credit have increased. Cap rates have increased compared to a year ago, and if the lending rates continue to increase that will have a direct effect on apartment pricing.
What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market?
Job growth has been steady, and our unemployment rate is low around 5 percent compared to a lot of other areas. The Seattle area has experienced in-migration of over 40,000 a year. In general, with lower unemployment rates and continued job growth we see the apartment vacancy rates remaining low. The Seattle and Bellevue areas are continuing to expand, with numerous new projects underway.
Would you like to make any additional observations about the multifamily market in your area?
In the greater Seattle area, with the limited supply of apartment units, strong employment base, and in-migration, our vacancy rates are lower and rental rates are increasing. The cost of home ownership has risen dramatically over the past few years, and with recent challenges of obtaining credit in the current market, renting is a good affordable alternative.
Submitted by Joe Levin, vice president, multifamily investments, with the Seattle office of Colliers International.