Rental Market Remains Robust Driving Apartment Purchases and Rent Increases

Seattle’s rental market remains red hot according to a market report relesed today by Marcus&Millichamp, confirming a large feature we ran in our April issue. The report points out that demand continues to outpace supply resulting in multiple offers for many apartment properties. Strong job growth continues to be the most important factor driving demand. While employers added 39,000 jobs in the year ended March 31, an increase of 2.3 poercent, this calendar year, the report preducts Seattle will create 56,500 new jobs, an increase of 3.3 percent.

Those new jobs should attract enough new tenants to the region to fill the 6,900 apartments expected to be completed this year. That’s up from the 4,000 new apartment units that became available in the Seattle metro area last year. Indeed, in spite of all the new building, overall vacancy rates have continued to fall, dropping to 4.3 percent in the past year, down from 4.8 percent. However, experts expect the flood of new apartments hitting the market will push vacancy rates back to 4.6 perent by the end of this year.

Rents rose 5.9 percent in the year that ended March 31, but the report expects rent growth to slow to 4.9 percent this year.

Higher rents are driving up the prices of apartment complexes. The median price of an apartment climbed 15 percent last year to a five-year high of $152 per square foot.