Western Real Estate Business

JUL 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

Issue link: https://westernrealestatebusiness.epubxp.com/i/1001516

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Page 21 of 32

www.REBusinessOnline.com Western Real Estate Business • July 2018 • 21 SEATTLE'S MULTIFAMILY MARKET SOARS TO NEW HEIGHTS Population growth and company expansions have led to a boom in Seattle's multifamily market. By Jerry Holdner S eattle's econo- my continues to improve and has been one of the top performing markets nationally for new construc- tion. There are more cranes currently be- ing used in Seattle than anywhere else in the country, main- ly for multifamily product. Many multifamily developers are counting on the tech industry and Amazon's growth to continue, which is evident with the large projects in close prox- imity to Amazon's offices. The South Lake Union submarket has the largest project under construction in Seattle at this time. Onni Towers is a 1,128-unit, high-rise project being developed by Onni Group with an estimated deliv- ery date of November 2020. This proj- ect will help with Seattle's growing demand for housing. New construction for multifamily units has been averaging about 12,000 new units per year since 2014. About 5,500 units have been added to the market in the first half of 2018. There are currently about 150 buildings to- talling 22,500 units under construc- tion, most of which are situated in Downtown Seattle (3,975 units) and Lake Union (3,342 units). We are an- ticipating 13,200 units to be delivered to the market by the end of the year, 8,300 more units in 2019 and 1,330 more in 2020. The most active devel- opers in the Seattle multifamily mar- ket are Vulcan with 1,611 units under construction in six different buildings, Onni Group with 1,128 units in one project and Holland Partners Group with 770 units spread out over three buildings. With population growth well above the national average and recent ex- pansion announcements from Ama- zon, Google, Facebook and Microsoft, to name a few, it is safe to expect this construction will be absorbed. In fact, current absorption has had no prob- lem keeping pace with all the devel- opment. This is evidenced by the drop in vacancy over the past few years. Vacancy has dropped by 200 basis points since 2009 and currently stands at 5.2 percent. Rents have increased dramatically since 2009 due to the high demand created by high-paying job growth. The average asking rent per unit in Seattle was $982 per month in 2009. That number stands at $1,570 today, and $2,300 for downtown. We will see rents continue to increase in the near future, but at a much slower pace than before since there will be 13,000 new units hitting the market by the end of the year, placing upward pressure on vacancy. We should also expect to see landlords offering more move-in in- centives as these projects are complet- ed. Higher rents have helped outly- ing submarkets like Federal Way and Renton, which have benefited from many tenants being priced out of the downtown and core markets. Other markets like Tacoma and Puyallup have seen drops in vacancy as well as strong rental growth since they offer some of the lowest rental rates in Se- attle. Jerry Holdner, Director of Research, Kidder Mathews Holdner New construction for multifamily units has been averaging about 12,000 new units per year since 2014. MULTIHOUSING ADVISORY AND EQUITY ARA is the leading investment advisory firm in the multihousing industry. The firm's combination of asset sales and, through the NKF Capital Markets brand, debt and equity services, yields more than $28 billion in multifamily transaction volume annually. From marketing the sale of single assets and portfolios to, through the NKF Capital Markets brand, sourcing acquisition and development equity and financing, ARA provides 360-degree solutions for clients. In addition to market-rate and mixed-use properties, we offer specialized services in land, student, seniors, manufactured and affordable housing. Berkeley Point Capital, a top five Fannie Mae and Freddie Mac lender in 2017, offers the full complement of Fannie Mae, Freddie Mac, FHA, Life Company and Conduit products as part of its multifamily, affordable, student, seniors housing and healthcare expertise. The firm has a team of over 250 professionals strategically positioned nationwide. Berkeley Point has earned a reputation for extraordinary service and top-notch guidance, offering clients speed, creativity, ease of interface and certainty of execution from beginning to end. Seattle - 206.407.0225 Portland - 503.575.9550 aranewmark.com STRONG PACIFIC NORTHWEST PRESENCE Seattle/Portland - 503.972.5519 berkpoint.com

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