WASHINGTON'S LEADING BUSINESS MAGAZINE

About 31,000 apartments units will be built in the Seattle area from 2013-2015, that's more than were built in the last nine years.

continues to recover.

New apartment development has accelerated and this trend is expected to continue over the next three years. In 2012, an estimated 6,075 new units were completed. New development has ramped up and is anticipated at about 8,382 new units for 2013. Currently, there are 11,774 units under construction and another 20,698 planned over the next four years for a combined future potential of 35,428 units (2013 through 2016). Although vacancy has remained at very low levels for the past two years, accelerating future apartment deliveries should begin to put upward pressure on the market vacancy.

Based on the latest new unit delivery timelines projected by Dupre+Scott, our forecast predicts the regional vacancy peaking at about 6.4% by mid 2015. As these new units are delivered, it is expected that use of concessions will temporarily increase and rent growth will moderate as these new units make their way through the system.


Vacancy Trends

According to the Spring 2013 Dupre+Scott Vacancy Survey, the regional (five county) vacancy rate is estimated at 3.8%. This is a measure of “market” vacancy that excludes units in lease-up and those undergoing significant renovation. Including these units, the “gross” market vacancy is 5.2%.

Vacancy rates generally have an inverse relationship with changes in rent; as vacancy rates increase the rate of rent growth generally decreases. Over the past twelve months the average regional rent on a per square foot basis increased from $1.21 to $1.28/s.f./month (5.8% increase) in tandem with vacancy falling by 90 basis points.

Over the last 20 years, the regional market vacancy was as high as 7.5% in March 2003 and as low as 3.6% in September 1997. Historically, the regional vacancy has averaged about 5.2%. Our baseline forecast predicts the regional vacancy peaking at about 6.4% by mid 2015 based on the latest anticipated new unit delivery timelines projected by Dupre+Scott. As these new units are delivered, it is expected that use of concessions will temporarily increase and rent growth will moderate as these new units make their way through the system.

 

Rent Rate Trends

The King-Seattle sub-region (All Ages)