Multifamily Deliveries Triple Demand in Seattle
Supply is surging in Seattle's multifamily sector — but some fundamentals are showing resilience. Deliveries in the third quarter reached 2,273 units, which is more than triple the net absorption of 728 units, as highlighted in a CBRE market report. Also, the September quarter deliveries are up from the 1,932 units posted in the previous three months.
On one hand, the results may have weighed on occupancy, which dropped by 30 basis points to 95.5 percent.
But some other categories prevailed, like rents, which grew by 20 basis points to $2,247 per month in the market.
"14 out of 20 submarkets in the Puget Sound region showed positive year-over-year rent growth. This was led by the South Lake Union/Queen Anne and the West Bellevue/Mercer Island neighborhoods," said CBRE.
Investment sales were also strong, with the 12-month trailing month volume reaching $5.8 billion, up 75.1 percent year-over-year. Some of the largest deals in Seattle involved 211-unit 8th and Republican (trading for $94.85 million), followed by 248-unit Pratt Park, going for $80.5 million.
Add that to the fact that the cost of renting is far cheaper than owning a home in Seattle. CBRE finds homeownership to be 2.65 times more expensive, which is playing a part in more favorable conditions for local multifamily landlords.
"Limited for-sale inventory and high mortgage costs are driving up the number of households renting out of necessity," CBRE further explained.
Plus, Seattle is home to more affluent residents, with the median household income of $123,400 significantly exceeding the national average of $84,560.
Source: GlobeSt/ALM