Puget Sound Multifamily Fundamentals Attempt Recovery as Construction Picks Up
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Puget Sound multifamily fundamentals, by and large, took a dip in the second quarter as construction picks up again in the region. However, conditions appeared to improve for the most part on a quarterly basis, according to a Colliers market report.
An example of this trend is occupancy, which ended June at 95.4 percent. That's up by 60 basis points from the first quarter — but down 50 basis points year-over-year.
For absorption, the 3,503 units were down from the 5,615 units in the second quarter, but up significantly from the 982 posted in the three months ending March. On a positive note, demand is now outpacing the new supply of 1,234, which is down from the 2,843 posted at the end of the second quarter of 2025.
Also, average monthly rents climbed to $2,236 versus $2,187 at the end of the second quarter.
While the trends might point to a steady recovery on a quarterly basis, construction soared to 16,551 units at the end of June. That's up from the 13,104 posted a year ago.
"Development activity remains concentrated in Seattle's urban core, with 16,551 units under construction regionwide," Colliers said.
"Downtown Seattle (2,544 units) and University District/Ballard (2,489 units) continue to account for the largest share of the pipeline."
Meanwhile, investment activity came in more mixed. On the one hand, transaction volume slowed to roughly $729 million, from $883 million in the first quarter, but average prices per unit jumped by 14 percent quarter-over-quarter to $311,000. This comes as interest rates remain high, with the Federal Reserve voting to hike rates today by 25 basis points.
"Year-to-date, the market has recorded 170 transactions and roughly $1.6 billion in sales volume, while cap rates remained relatively stable at 5.5%, reflecting continued investor demand for well-located apartment assets despite a more selective investment environment," Colliers said.
KKR made the largest multifamily buy in Puget Sound, acquiring a 195-unit property for $94 million. Sagard Real Estate and
Seattle Social Housing Developer (SSHD), came in second and third, with $68.56 million and $60.86 million buys, respectively.
Source: GlobeSt/ALM