Commercial Real Estate News / Investing / 2022 Multifamily Market Report: Seattle

2022 Multifamily Market Report: Seattle

Published: 06-01-22 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Seattle remains an interesting and viable city for commercial real estate investors.

While certain areas of the city are thriving, job growth and residential construction have slowed down in the past five years.

Luckily, rents have remained relatively steady.

There is a staggering number of multifamily units in Seattle. At the time of this writing, there were 276,121 units in Seattle’s 44 submarkets.

In this Seattle multifamily market report, learn more about the current conditions and forecasts for this market.

Seattle Multifamily Highlights

Like other large, northern cities, Seattle’s growth was stunted by the COVID-19 pandemic and migration trends from residents leaving the state.

Some interesting highlights of the Seattle multifamily market report include:

Rent growth in Seattle is very minimal at 0.1%;
Average rents in Seattle were $2,328 a month as of December 2020;
Per-unit prices for multifamily investments averaged $372,476.

The overall cost of rent remains high despite limited growth because of the lack of inventory growth and the high cost of rent before the pandemic.

The Pacing of Multifamily Rents in Seattle

Across the nation, rents in 2021 rose by 11.3%. For a one-bedroom, rents increased by:

King County from $1,557 in 2019 to $1,599 in 2021;
Snohomish County from $1,557 in 2019 to $1,599 in 2021.

Compared to other cities, rents did not rise as much in Seattle.

Long-Term Changes in Rent

It is generally quite expensive to live in a multifamily rental in Seattle. Rents continue to rise because there are not many new units for rent addition in the city.

As more choice becomes available, the prices will level out or decline.

Seattle is a good place for investment property thanks to the lack of inventory and its strong demand.

The only caveats are a high cost of rent and an uncertain job market.

Multifamily investors that want a long-term holding should keep their eyes on the job market.

If more jobs are created, the rent prices will increase as well.

Short-Term Changes in Rent

Seattle’s appeal as a destination city will continue to attract residents as it has in the past 50 years.

Rent isn’t anticipated to go up as much in the short-term in Seattle as it is in other places.

Rents started out quite high. Compared to other cities, Seattle’s rent growth is relatively slow.

This is a good opportunity for investors to buy because the rents are not going up as much as they could be in other parts of the country.

Even small increases will have a decent impact on the profitability of rentals.

Multifamily Sales in Seattle

Despite stable rents and limited growth during the pandemic, there have been some notable multifamily sales and acquisitions over the past year or so.

Notable Acquisitions So Far

In 2021, investors from CORE Real Estate Capital and Westland Investors started a joint venture to purchase the Terra Verde Apartments for an undisclosed amount.

The complex has 73 apartments, which will undergo a $1.5 million upgrade over the next year.

Throughout 2021, RISE Properties made seven acquisitions, including Surprise Lake for $106 million.

All of these acquisitions are in areas where jobs are expected to grow over the coming years.

Kennedy Wilson purchased two facilities, Bristol at Southport and Geo Shoreline, for $265 million.

Both facilities are considered high-quality apartments located in areas that are seeing rapid growth.

Notable Sales So Far

In mid-2022, the broker Kidder Mathews coordinated a $58.3 million sale of two multifamily apartment buildings from an undisclosed seller to an undisclosed buyer.

The two buildings combined have 142 units.

Market Forecast for the Rest of 2022

Seattle is struggling to recover from the pandemic. It faces supply chain issues and labor shortages that hurt the city.

Compared to other major metros in the United States, Seattle saw only a small increase in the number of new units. This kept rent higher than in other places in the nation.

New multifamily construction slowed down to the lowest number recorded since 2013: 7,960 units.

New construction has not recovered here as it has in other areas of the country.

General Investor Activity: Where is the most money flowing?

Seattle is a diverse city. There are many different types of investors in the metro area.

The Northwest remained an attractive region for investors throughout the pandemic.

With the start of 2021 and 2022, Seattle has continued to be a good place to invest. Seattle is a major destination city for people working in aerospace and high-tech firms.

This is also a good place to invest because there are many types of businesses looking to expand and plenty of room for expansion.

Takeaways for Multifamily Investors

Seattle is a very expensive real estate market for buyers and investors.

Not only do investors have to invest in multifamily rentals, but they must also consider other costs like property taxes and maintenance.

Seattle can be lucrative for owners of multifamily apartments.

Rent prices have remained relatively high from the start of 2021 until the end of 2022.

Rents rise because there are not enough new units available for rent in addition to keeping up with demand.

Rent prices in Seattle have risen a little bit over the past two years but they have remained relatively stable.

The number of new renters dropped significantly after the pandemic. This affected the housing market because there were fewer people renting apartments.

Investors looking for a long-term property that should see a return in the future should be happy about Seattle’s rental market for multifamily.

Current economic growth is keeping rent prices stable and not increasing as much as other metros are.

This makes it a good area to invest in because there is still room for growth in the near future.