Multifamily Market Signals Stability in Seattle
By Dylan Simon, Kidder Mathews
As we left 2020 behind, we collectively hoped that turning the calendar to 2021 would stem to tide of COVID and bring about a V-shaped economic recovery. Alas, we enter this spring with many of the same hold-over concerns from a very rocky 2020.
Thankfully, stability is right around the corner!
A comprehensive and broad recovery may not be immediately recognizable, but there are signs economic stability is imminent for the Seattle apartment market.
Big Tech is Getting Back to Work
Big Tech evacuated urban centers in March 2020, taking with it urban-dwelling apartment renters. Apartment rental rates across Seattle, San Francisco and New York City plummeted more than 30 percent in the ensuing months.
Once these “occupiers” return, that light-switch will once again flip in the positive-growth position.
Facebook announced in March that it is reopening its Seattle offices. Just as Big Tech was quick (and smart) to shut down in-office operations at the outset of COVID-19, it will act similarly quickly (and intelligently) in reopening its offices. Expect the reopening trend to spread throughout Big Tech in a coordinated and swift fashion as that industry tends to know it is more innovative and competitive once everyone is back in the office. Why else would they have invested billions in urban campuses?
Apartment Rental Rates Rebounding
Seattle and other urban, coastal apartment markets had a rough 2020 as a multitude of challenges and unfriendly press coverage painted a bleak picture.
Our team remained focused on the data — and the data shows the tide of apartment rental rate declines started to stem nearly three months ago. Rental rates are already rebounding in Seattle.
Seattle Apartment Rent Growth — Trailing 12 Months
Rental concessions began to burn off during the first few months of the year, which lead to actual rental rate growth for the first time since the onset of COVID-19. As employees return to work, hiring should pick up and competition for apartment units will return. Expect rental rates to rebound fully and grow from there.
How can we be so sure? High-wage jobs remain plentiful!
High-Wage Job Growth Leads the Market
In 2009 — the last time the world seemed to end — no one forecasted Seattle would lead the nation’s economic recovery. Yet by 2012 Seattle was back to full employment and off to a near 10-year bull run of not only job growth, but high-wage job growth. The same phenomenon is back again. Hiring requisitions for software developers doubled between December 2019 and January 2020 at an annual average pay rate of nearly $140,000.
King County Job Postings — January 2021
Seattle’s top billing as the best apartment investment and development market year-after-year during the last decade was no accident. It was the product of the same dynamics that are still present: high-wage jobs, a robust tech ecosystem, excellent quality of life and relative affordability compared to large, urbanized cohort markets.