Commercial Real Estate News / General CRE / Q4 2022 Multifamily Report: Seattle, WA

Q4 2022 Multifamily Report: Seattle, WA

Published: 03-13-23 Category: General CRE

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.

Hosting major corporations like Amazon, Snapchat, and Apple, Seattle is no stranger to Fortune 500 businesses, and Seattle’s multifamily market is a major hub for employers and employees alike.

The unemployment rate in Seattle was at 3.5% mid-Q3, which is lower than the national average of 3.7%. In the 12 months ending in July 2022, the job market expanded by 6%.

Each sector added jobs, totaling 95,500 positions added. Leisure and hospitality added nearly 20,000 jobs, while professional and business services added about 18,000

General Area Overview & Demographics

Seattle, Washington, is a bustling city on the west coast of the United States. According to the US Census Bureau, Seattle is the 18th most populous city in the nation, with an estimated population of 730,000 in 2019.

Approximately 48% of Seattle’s population is White or Caucasian, 15.7% of its citizens are African American, 14% Asian, 8.3% Hispanic or Latino of any race, 0.6% Native American and Alaskan Natives, 0.4% Pacific Islander and 6.9% other races.

Seattle is home to renowned universities and colleges. The University of Washington, located in the city’s University District, is Seattle’s most prominent higher education institution. Founded in 1861 and recognized as one of the top public universities in the nation, UW offers a broad spectrum of undergraduate and graduate degrees.

The iconic Space Needle, built in 1962 for the World’s Fair, is a popular tourist destination offering breathtaking views of Seattle from its observation deck. Nearby, the Experience Music Project Museum provides interactive exhibits and live music performances throughout the year.

Seattle is known for its unpredictable weather, particularly in the winter and spring. Rainfall is expected throughout the year, with an average of 37.4 inches of precipitation annually. In winter, snowfall typically occurs once or twice a season and generally does not accumulate. However, heavy rains that cause flooding can occur from November to April.

Summary of Seattle Multifamily Real Estate Performance in Q4 2022

With increased and consistent deliveries throughout 2022, the occupancy rate slightly declined to 95.6%.

Renter-by-necessity occupancy dropped to 96%, while renter-by-choice was around 95.4%.

What are multifamily rents like in Seattle?

Multifamily real estate in Seattle saw a 0.2% decline in rent, continuing a steady decrease quarter-over-quarter. The average rent now sits at $2,230, while the national average saw a 0.3% increase and settled in Q4 2022 at $1,720.

Renter-by-necessity units are averaging asking rent prices of about $1,870 per month, while renter-by-choice is now at $2,520, burdening most Americans in the area.

Purchase & Leasing Activity

Year-to-date, $3.2 billion was traded by investors for Seattle’s multifamily assets, a $900 million increase when compared to the same period last year.

Of the assets sold, 60% were renter-by-necessity, with the overall price per unit average at $388,000.

Notable Multifamily Real Estate Deals in Seattle in Q4 2022

The following office deals and leases occurred in Seattle’s multifamily market.

GID acquired Uplund Totem Lake for $242 million;
Acacia Capital Overlook acquired Lakemont Purchase for $204 million; and
Seminole Tribe of Florida acquired Alton Heartwood for $104 million.

These are a few among other transactions that took place.

New Multifamily Real Estate Development Activity in Seattle in Q4 2022

As of September 2022, the metro had 28,450 units currently being constructed and an additional 107,000 units in the planning and permitting stage.

In Q4 2022 alone, over 2,460 units broke ground, while a total of 8,206 broke ground total for this year.

During the first three quarters of this year, developers brought 7,700 units online, which accounts for nearly 3% of the currently existing inventory, the vast majority of which are renter-by-choice properties.

It’s expected that an additional 14,000 units are to be completed before the year ends.

Market Forecast for Seattle’s Multifamily Real Estate Market

The market in Seattle is experiencing a contraction.

The city’s unemployment rate, while below the national average, has increased. Rent has declined in Q4 2022. The city’s population had its first dip in over a decade. Economic headwinds are looming in the near future. Occupancy has declined.

Seattle’s multifamily market is expected to remain in the lull it’s currently in, but its job market may continue expanding.