According to Tom Cain of Apartment Insights Washington, rents are up In the King County metro area by 7.9% over the past year, and now average $1284 per unit or $1.53 per square foot. The highest rental rates are in downtown Seattle at $2.43/sf. Class C properties have the lowest vacancy rate (at 3.7%) and rent for an average of $908.Vacancy rates are also down on average to 4.17%. Ballard has a relatively high vacancy rate of 8.6%, due to the overbuilding in this submarket. By the time the units under construction there are completed, it will have quadrupled the inventory of 50+ unit complexes in the past six years.
There are currently 16,135 units of new construction in the metro area, up 16.6% from a year ago. 59% of these units are in the City of Seattle.
Rents are still forecast to increase 4.5%-5.5% over the next several years, according to Reis. Cain finds it remarkable that the market continues to strengthen in the face of massive amounts of new units. The underlying strength of the economy is what contributes to this growth. According to the US Census, Seattle grew faster than any other major American city in the past year. Seattle also has the second best rate of small business creation in the country, according to recent data.
Had all of these new units not been built, then Seattle rents would be even higher. The rental market’s performance in the past year has been stellar, thanks to developers and lenders who have provided apartments to help meet the demand.
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