Welcome back to The Numbers! This time around, we checked in with Marcus & Millichap for a mid third-quarter update on apartment demand and development in the Seattle area. With so much of the year behind us already, the firm is ready to forecast the numbers for 2013–let’s see how they compare with last year’s stats. Will apartment demand keep pace with development?
Good news from the employment sector–according to Marcus & Millichap, over 48,000 jobs have been added over this time last year–that’s already a 2.8% expansion, and it means jobs aren’t that far from 2008’s Q1 all-time high. By the end of the year, it’s predicted that job expansion will top 3.3%, or a total of 57,000 added jobs. So where are the gains coming from? The biggest gains are coming straight from the trade, transportation and utilities sector–that sector alone added over 12,500 jobs over the past four quarters.
Then we’ve got construction. According to this report, over 3,800 new units have been added to the market this calendar year–but development is easing a bit over last year, as 19% fewer multifamily building permits have been issued, compared to this time last year. Don’t expect too much of a drop in the supply, however; Marcus and Millichap are expecting 8,000 units to be completed by the end of 2013. Of the 20,000 units currently planned, developers have announced 2013 construction start dates for just 900 of them. We’ll see what pops up around town!
Oh vacancy, you’re the best–what with the way you’ve just kept dropping quarter after quarter lately. Strong job growth has lead to a vacancy rate in the Seattle Metro area of just 3.6%, and that’s an even smaller number in some submarkets–the North Seattle/Shoreline market wins the prize at just 1.5%. Vacancy is expected to rise a bit over the next few quarters, as new units come onto the market. Metro-wide, vacancy is expected to rise to 4.6% by the end of the year; we’ll find it to be a little lower or higher in certain submarkets.
Finally, there’s rents. While vacancy has been dropping, rents have been growing–during Q2 of this year, available effective rents in the Seattle metro area jumped up 4.7%, to an average of $1,179 per month. The West Bellevue/Mercer Island submarket is where rents are highest at the moment, with an average of $1,865; meanwhile, rents in the Capitol Hill/University District/Ballard market hit $1,614. For the entire Seattle metro area, Marcus and Millichap estimate that available effective rents will jump a total of 4.9% by the end of 2013, to an average of $1,155. That’s a little down from last year’s spike of 6.1%, because of new construction; but it’s still a nice healthy increase.
That’s all we have for you this time around. Want more of the numbers? Check out Marcus & Millichap’s Third Quarter 2013 report on their website.