Seattle–Since the beginning of this year, the Seattle rental market has seen marked improvement, according to Hendricks & Partners. Rents have remained steady, occupancy has increased and concessions are disappearing. The expectation is that rents will begin to increase market-wide in the beginning of 2011.
Average rent in the Seattle MSA in March of 2010 was up 18 percent from six years prior. Over this same period, the average rent in the Downtown Seattle submarket rose 17.1 percent.
The biggest factor for this positive outlook is the lack of new supply in the near future. In addition, the Seattle/Bellevue residential market is still relatively expensive, which has helped the rental market. While some condos were converted to apartments, the overall market is between 90 percent and 95 percent leased.
Seattle has a diverse economy that includes employment in healthcare, biotechnology, aerospace and information technology sectors.
Downtown Seattle and core Eastside locations like Bellevue/Redmond show strong investment opportunities, according to Hendricks & Partners, and secondary markets such as Renton/Kent have good economic indicators and less competition. The company reports that it received over 25 offers on the last two deals it marketed on the Eastside and 15 offers on a deal in downtown Seattle.
Despite recent spikes in construction costs and land prices, the downtown Seattle area has experienced some development, including: Aspira, which includes 323 units; Borealis Apartments, a 53-unit development; Gallery, containing 231 condos; Marselle, a mixed-use development that includes 116 condo units and five live/work residences; Rollin Street Flats, comprised apartments; The Olivian, a 27-story apartment building that features 216 apartments; and 2000 Third Avenue, a planned apartment project of 421 apartments.
Multifamily transactions, representing nearly 1,500 units, that have occurred this year, through July, have traded at cap rates between 4.5 percent and 6.75 percent.