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Seattle is filling up new apartment units faster than any other region in the country.
Significant new multi-family construction, especially in the South Lake Union and First Hill neighborhoods and suburbs such as Redmond and Bellevue had led to speculation that an apartment bubble could be forming. However, as highlighted by a recent article in the Seattle Times, demand for new units is meeting the increase in supply.
More than 3,400 new units were filled in the first quarter of 2019, and from March 2018 to March 2019, Seattle saw a 15% increase in leased units. Previous fears of a bubble caused by the recent construction boom seem to be waning. Over the last 12 to 18 months lenders have been particularly wary of new apartment construction loans.
In 2018, vacancy rates in Seattle had risen to their highest post-recession levels, but have since leveled off. At 26% a year ago, those vacancy rates have fallen all the way to 12% today, largely due to the leasing of new construction in South Lake Union and First Hill. A strong local economy and foreign immigration, due in large part to the strength of the tech sector have been contributors to reduction in vacancy. Meanwhile, rents in Seattle have increased approximately at the rate of inflation.
The demand for apartment units is a positive sign for multi-family investors. While many renters had hoped that increased inventory would result in lower rents and increased concessions, that has not been the case. For the most part, Seattle apartments are filling up at the same rate they’re opening.
We will continue to monitor developments in the Seattle real estate market as the new apartment openings peak this summer. For more information on the Seattle renter boom or commercial real estate news throughout the Northwest, call Juniper Capital today to start the conversation.