Happy Friday! Today we’ve got Part II of our December Apartment Advisor recap. Armed with data on job, migration, and interest rates; investment, supply, and demand trends, their partnership with Conway Pedersen for the economic nitty-gritty, and 30 years in the business, they’ve got predictions on how the next few years will go. Let’s see what they’ve got for us, shall we?
- Employment: Conway Pedersen expects the region to add 206,900 jobs over the next five years. When we look at the period between 2003-2008, when just 191,600 jobs were added, those numbers look pretty darn good!
- Demand: Q3 of this year showed 7.9 jobs to each occupied apartment; that means we should see about 26,200 additional rental units added over the next five years. With population growth, net migration, Gen Y renters and other factors in the mix, Dupre + Scott is expecting demand for about 29,000 total units.
- Supply: Over 30,500 units are expected to open in the King, Snohomish and Pierce counties over the next five years. Apartment Advisor puts that down to about 8,000 in 2013, rising to perhaps 9,100 in 2014, and then slowly tapering off in the years after, with about 3,900 in 2017.
- Vacancy: September’s market vacancy (that’s excluding units in construction and renovation) hit 4.8%, with gross vacancy at 5.5%. By late 2013, market vacancy should rise slightly to 4.9%, while gross will fall to 5.2%, as job growth and rental culture will keep demand strong. But after 2013, both rates are expected to start climbing–they’ll peak in Q1 2015 at about 6.4% and 7.3%. Those numbers, similar to those seen between 2002 and 2004, indicate oversupply–but not drastically so.
- Rent: As a rule, rents climb until vacancy hits 7% or so–then they start declining. Based on the vacancy forecast, we’re looking at a 2.8% climb in rent during 2013, before the supply of new units catches up to demand; in 2014, there will be higher vacancy and rent will rise less than 1%. We should see a 1.3% increase in 2015, as supply and demand gets back into equilibrium once more.
Those are some of the highlights of what Dupre + Scott are predicting, and there’s lots more info in the issue itself–check it out here. But for now, enjoy your weekend (and/or get your holiday shopping done). Christmas is just around the corner!