MARKET SNAPSHOT: Large Number of Institutional Deals Hit Seattle Market

2 min read

Seattle--The Seattle market has weathered the recessionary storm well, according to Kenny Dudunakis, senior partner in Hendricks & Partners' Seattle office.

Seattle—The Seattle market has weathered the recessionary storm well, according to Kenny Dudunakis, senior partner in Hendricks & Partners’ Seattle office.

“We have good fundamentals; we have good job growth. We have people still moving into the Seattle area,” he points out. “Microsoft is on a perpetual hiring mode … Google has made a splash here, [and] Amazon continues to grow.”

The unemployment rate, however, hovered just above 9 percent in July, according to the Bureau of Labor Statistics.

In the apartment market, rents have increased as concessions burned off, and Dudunakis reports that the market has seen about 5 percent rent growth, with Class A apartment rents in infill locations pushing between $2.50 and $2.70 per square foot.

The overall market is about 5 percent vacant, according to Dudunakis, who notes that even Class C properties are “hanging in there.”

New deliveries—about 3,000 units—are slated to come online between 2012 and 2014.

As far as the transaction market, core deals are trading in the low-4 percent range, with what Dudunakis calls “secondary core deals that are B properties” trading in the high 4s. Product in secondary markets is seeing cap rates between 5.25 percent and 6 percent.

“Currently, we are getting more of the institutional deals hitting the market than we have in a long, long time,” Dudunakis tells MHN. And, he adds, distress never hit Seattle.

As far as new-development opportunities, he says, “you cannot find a garden site anywhere in the Puget Sound area. Anything built now will be mid-rise in outlying areas and high-rise in downtown Seattle. If you can find good quality mid-rise land in infill locations, that’s where you want to be right now.”

While the market currently shines bright, Dudunakis notes one potential negative force: too much high-end supply coming online. “We don’t know how deep that market is,” he points out.

You May Also Like

The latest multifamily news, delivered every morning.


Latest Stories

Like what you're reading? Subscribe for free.