Days of big rent increases for apartments may be over, especially on Eastside
Area’s average rent drops slightly, with several Eastside markets reporting the biggest declines. A huge apartment-construction boom and bridge tolls may be having an impact.
Seattle Times business reporter
Local landlords may have to get used to more vacant apartments and smaller rent increases, a recent report suggests.
The average monthly rent in complexes with 50 or more units in King and Snohomish counties fell slightly during the last quarter of 2012, to $1,140 from $1,142, after three straight quarters of “impressive” growth, according to research firm Apartment Insights Washington.
And, while the two-county vacancy rate dropped from 4.85 to 4.75 percent, the decline was all Snohomish County’s doing, said Tom Cain, who owns the research firm.
King County vacancies were unchanged.
“The market is still very healthy” for landlords, Cain said, “but it’s flattening out, and I’m concerned about the impact of all the new construction in the pipeline.”
Redmond, Kirkland and East Bellevue saw the biggest quarterly drops in average rents — more than 3 percent — and the Bothell and Woodinville-Juanita areas experienced the steepest increases in vacancies.
The region is experiencing its biggest apartment-construction boom in at least 20 years. Larger complexes containing about 2,000 new apartments opened during the last three months of 2012, Cain said, and about 2,000 more will be added to the region’s inventory in each quarter of 2013.
“That’s going to work to keep rent increases down,” he said.
Apartment Insights based its quarterly report on a November survey of every larger project but one in the two counties. The statistics don’t include new complexes that are still leasing up.
Cain suspects tolls on the Highway 520 bridge are responsible for the rent drops in some Eastside markets. The tolls were imposed a year ago with no discernible impact on the Eastside apartment market through most of 2012.
But by fall, “people had had time to adjust,” Cain said, with some former commuters perhaps choosing to live closer to jobs in Seattle.
Traffic on the bridge has fallen about one-third since motorists began paying tolls, according to the state Department of Transportation.
Increased congestion on Highway 522 as more commuters take it to avoid the 520 toll may be discouraging people from renting in Bothell, Cain said. The vacancy rate there rose from 5 percent to 6.7 during the quarter.
But Jim Wiard, executive director of the Washington Multi-Family Housing Association, an industry group, said apartment owners in those Eastside submarkets report no impact from the tolls.
They attribute recent fluctuations in rent and occupancy instead to employment patterns and competition from recently completed apartment buildings, he said.
Ellen Miller-Wolfe, Kirkland’s economic-development manager, said the city still is documenting the tolls’ impacts and hasn’t yet looked at their impact on housing.
The apartment vacancy rate rose nearly a full percentage point in downtown Seattle, including Belltown and South Lake Union, during the last quarter, according to Apartment Insights.
High rents there — the average is $1,626, second only to downtown Bellevue — may be diverting prospective tenants to less-expensive surrounding neighborhoods such as First Hill and Capitol Hill, Cain said.
The vacancy rate dropped during the quarter in those two neighborhoods.
Eric Pryne: email@example.com or 206-464-2231