SNAPSHOT, APRIL 2004

Seattle Multifamily Market

Laycock

Seattle will experience a lull in new multifamily construction this year, says Greg Laycock, senior director at Cushman & Wakefield of Washington. Only 1,200 units are anticipated, down from the 4,000 to 5,000 that are normally completed per year.

“This decrease in new supply should help to decrease the vacancy in our market by about 1 to 1.5 percent during the next 12 months,” says Laycock.

The current vacancy rate for Seattle’s tri-county area is 7.8 percent with the biggest void found in the newer multifamily projects located in the downtown area and Bellevue, Washington. The overall average rent for the area is $810. Rents range from $645 for studios to $1,075 for three-bedroom apartments.

According to Laycock, the multifamily development that is taking place can be found in downtown Seattle and to the east in Bellevue, Redmond, Issaquah and Kirkland, Washington. Bellevue’s Lincoln Square mixed-use project, developed by Kemper Development Company, features 148 luxury condominiums on the top 23 floors of a 41-story tower. In downtown, Simpson Housing will develop a 222-unit apartment project called Neptune. SECO Development’s Island Market Square, a proposed mixed-use redevelopment of an existing shopping center in Mercer Island, Washington, will feature 210 flats, townhouses and lofts to be situated above retail space.

New players investigating the development potential of the market include The Hanover Company, FountainGlen Properties, Crow Holdings, Opus Corp. and HAL Investments.

Many developments in and around Seattle signal the potential for growth in the multifamily sector. In Tacoma, Washington, the $194 million expansion of the Port of Tacoma could create approximately 1,600 new jobs. The South Lake Union biotech project, spearheaded by Microsoft co-founder Paul Allen, should produce thousands more employment opportunities in Seattle. Boeing recently announced the location of the 7E7 project in Everett, Washington, north of Seattle, with the potential to add 2,700 new jobs. Lastly, Microsoft will be building out its south campus in Issaquah to a total of 2.9 million square feet, which could potentially mean room for 14,000 new employees.

“Economic conditions in the region have been dismal for 3 years,” says Laycock. “Yet, Seattle is clearly poised for a meaningful recovery. Now, not only has the aircraft production and employment begun to stabilize, it is projected the Puget Sound economy will add 72,000 jobs in the next eight quarters.”

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