Retail and multifamily assets are performing well in the Seattle region as transactions, rents, and construction projects continue to increase. Seattle is land-constrained, which drives prices up as the city’s population increases. Additionally, Seattle is seeing rapid job growth and a regional unemployment rate that is one percent lower than the national average.
Unemployment in the Seattle market was at 4.8 percent in October, compared to a national average of 5.8 percent, according to the most recent report released by JLL. JLL cites substantial hiring by Seattle-based companies like Amazon, Boeing, and Zulily, as well as other firms, as playing a significant role in the city’s low unemployment.
A strong job market certainly doesn’t hurt a locale’s retail environment, and Seattle is no exception. Q3 2014 was particularly successful as retail vacancy declined, rental rates and absorption increased, and a handful of significant transactions took place, according to a report by Seattle-based brokerage firm Kidder Matthews.
One retail highlight of 2014 was the acquisition of downtown mall Pacific Place for $271 million by Washington, D.C.-based Madison Marquette. Additionally, several major projects have been planned, including the 1.5 million SF expansion of Lincoln Square in suburban Bellevue and the 250,000 SF mixed-use Village at Chambers Bay in southern King County.
Seattle’s multifamily sector also performed extremely well in 2014 and looks promising for the year ahead. About $3.3 billion worth of apartments were sold in the Seattle Metro Area last year, beating the previous record of $3 billion set in 2005. Even though record sales prices took place, the number of apartment complexes sold in 2014, 356, was down from the nearly 700 purchased in 2005, meaning that investors are paying much more for less volume. The price-per-unit paid was at $156,000 in 2014, much higher than 2009’s $96,000.
Also increasing is the construction of new apartments. Between 11,200 and 12,000 new multifamily units are expected to come online in 2015, up from about 8,000 last year. Rents increased nine percent year over year during 2014’s third quarter, fueling the new-unit demand.
Meanwhile, as with retail, multifamily saw major acquisitions take place in 2014. There were six multifamily transactions totaling over $50 million each in the third quarter alone, according to Kidder Matthews, with the $75.2 million purchase of Waterscape Juanita Village in suburban Kirkland leading the way.
Fundrise has already funded three projects in Seattle – the development of a modern apartment building in First Hill, an acquisition and pre-development loan for land in East Capitol Hill, and the construction of a Single Family Home – and continues to look for new opportunities in the growing market.
Image Source: Anupam_ts, Flickr