Developers plan more apartments in downtown Seattle
A tally by Business Insider shows there are 65,507 apartment units in various stages of the construction pipeline in the Greater Seattle area - and that's not counting buildings with fewer than 50 units or single family homes being built as rentals.
Five factors are driving developers' decisions to continue building apartments in downtown Seattle, according to a report by Marc Stiles, real estate reporter at Puget Sound Business Journal.
The seemingly insatiable demand for rentals is supported by several market indicators and has helped propel the metro area's annual rent growth to second-strongest in the country, according to one report. (Another study, by Multi-Housing News, has Seattle at #6, behind Oakland/East Bay (#1), San Francisco, San Jose, Portland, and Denver).
Several demographic segments account for the demand. Data for Seattle from RentCafe indicates a 17 percent increase in renters under age 34 during the 2009-2015 period and a whopping 45 percent increase in senior renters. During the same period, the suburban market increased 50 percent for both families with children who rent, and the same 50 percent jump for families without children who rent.
In a report published by PSBJ in early November, Stiles cited five reasons for sustained growth for apartment projects:
- Metro region's job growth: U.S. Bureau of Labor Statistics data show 8,300 jobs were added in August and 47,000 jobs were added year-over-year.
- Demand for office space in the city of Seattle: Data compiled by commercial real estate broker JLL indicates 101 companies are looking for a combined 4.3 million square feet.
- Seller's market: Records were shattered in October when Continental Properties' 34-story apartment building near Pike Place Market known as Tower 12 sold for $225.3 million, equal to $719,649 per unit.
- Region's apartment rent growth: Rents continue to increase; researchers at Zillow report a 5.5 year- year-over rise, second-fastest in the country.
- Demographic shift: Senior households are choosing to rent in growing numbers, according to RENTCafe.
Nationwide, about 2.5 million senior households joined the legion of renters from 2009-2015, according to census data crunched by RentCafe. The firm found the increase to be especially pronounced in Seattle.
Stiles noted some market-watchers believe the demand may be too optimistic. Dupre + Scott Apartment Advisors of Seattle told investors to expect the rental market to soften, citing plans to open more than 62,000 units in the next few years.