Colliers International | Seattle
Seattle Multifamily
2013 urban market study
home
July 2013 while urbanization takes shape, investors digest market fundamentals The urbanization of major metropolitan cities across the United States is no more poignantly displayed than in Seattle. Quantitatively, more multifamily development is occurring in Seattle’s urban core than any other time previously measured. Nearly 70% of tri-county development is destined for Seattle’s urban neighborhoods. As a result, market participants must pay close attention to both market responsive fundamentals and cyclical versus structural trends. Job growth in the Seattle-Bellevue-Everett MSA topped 46,000 in 2012, eclipsing growth seen in previous years. Conway Pederson forecast nearly 32,500 new jobs y-o-y through 2022, further bolstering optimism. Multifamily developers have continued to respond to such resilient demand drivers in kind, with over 30,000 apartment units planned through 2017. As of late, however, many developers and investors have pushed their chairs back from the metaphorical Thanksgiving table, not quite ready for seconds, yet still engaged enough to remain in their seats. Cautious optimism and careful analysis marks current investor sentiment. In the following report we discuss the market’s performance over the last two quarters, analyze continually strong demand drivers and take a detailed look at current deliveries and absorption. Finally, we take a street-level view of new developments, market fundamentals and emerging trends at a submarket level within the urban landscape of Seattle and West Bellevue.
Colliers International | Seattle
development & absorption study
Submarkets Downtown GREEN LAKE/WALLINGFORD/FREMONT
south downtown/ Pioneer square
BALLARD
capitol hill
UNIVERSITY DISTRICT
belltown
520
queen anne QUEEN ANNE WEST BELLEVUE
south lake union
SOUTH LAKE UNION CAPITOL HILL
BELLTOWN DOWNTOWN
green lake/ wallingford/ fremont
90
SODO/PIONEER SQUARE
90
university district west seattle
WEST SEATTLE
Ballard
west bellevue
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2013 performance to DATE An apparent dearth of yield appropriate alternative investments has put a compression effect on the sales market. As a result, we’re seeing fewer properties taken to market and owners reticent to part with income producing investments in this rent growth, low interest rate environment. However, developers looking to either take money off the table or provide equity for other development activities has resulted in several presale or partially stabilized asset sales.
supply & demand > 2,276 new units delivered to Seattle urban submarkets > Current Seattle unemployment is at 4.0%, 250 bp lower than the state
Number of sales
> 48,800 jobs were added to the region y-o-y > Employment is predicted to grow 2.6% in 2013, adding another 47,000 jobs to the region > Puget Sound region accounted for 73% of state’s new jobs y-o-y
KEY INDICATORS
> Seattle market vacancy is 2.9%, besting Puget Sound average vacancy of 3.8% > 2013 sales average was $243,462/unit, exceeding 2012 pricing by 22%* > 2013 average cap rate is 4.9%, matching a market low in 2007*
sales volume
> Average rent growth accelerated from an average of $1,376 in 2012 to $1,519 in Q1 2013, evidencing 10.4% growth* * Based on Dupre and Scott April/June 2013 Investment reports, Figures for buildings 20+ units in King County built 1986 & newer
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Job Growth Year-over-year numbers as of February 2013 show the addition of 48,800 new jobs to the Seattle-Bellevue-Everett MSA, evidencing a 2.7% gain. Comparing these figures to the national economy, with a 1.5% y-o-y job growth during the same period, indicates a job growth rate nearly double that of the nation. The Puget Sound region has captured 73% of the state’s job growth, mainly evidenced by workforce additions in technology, manufacturing and construction. Unemployment The story of national economic recovery is very much one of “have” and “have not” regions. Boasting an unemployment rate of 4.0% as of April 2013, Seattle has bested the nation by greater than 300 basis points and outperformed the balance of the state by nearly the same measure. April 2013 unemployment figures came in at 7.1% for the US, 6.5% for Washington, and 4.0% for the Seattle area. These are the lowest numbers since November 2008.
10.00%
US
9.00%
Washington
8.00%
7.1%
Seattle
7.00%
6.5%
6.00% 5.00%
4.0%
4.00% 3.00% 2.00% 2005
2006
2007
2008
2009
2010
2011
2012
2013
Data from U.S. Bureau of Labor Statistics
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19%
20% 28%41%
Queen Anne
a1
ureSouth Lake Union
2013 1%
West Bellevue
2014
2015
2016
SODO
796 58% 367 14% 149 4% 331 48%
31%
441 32% 911 36% 942 25% 0
0 370 14% 741 20% 105 15%
41%
37 1% 587 23% 1,807 48% 75 11%
1,362 100% 2,563 100% 3,753 100% 694 100% 30,116
Capitol Hill/Eastlake 24% 2013
ure 8% 015 544 ure 29% 5% 412
37% 429 8% 459 23% 849 22% 970 42% 498 20% 441 32% 911 36% 942 25% 0
ue
015 29% 16 015 37% 015 8% 015 23% 015 22% 015 42% 015 20% 015 32% 015 36% 015
24%
Capitol Hill/Eastlake
Queen Anne 2013
2014
2015
42%
2013 2014 2015 Future Downtown CBD 19%
2013
12%
2014
20151% 2016 37%
2014
2015 Future 19%Future
22%
19%
37% 37%
Capitol 2015 Hill/Eastlake 2016
11% and to gain a better 100% understanding31% of how 26%2013 0 37 delivered 15% units are 1,362 1% 100% being absorbed. 587 23% 1,807 48% 48% 75 11%
2014
Future 2013
24% 24%
5,469
UNITS
2014
2014
19%
2016
2015
2015
leases
Belltown 2014 2015
2016
UNITS
12%
2014
2015
20%
36%
2016 53%
University District
2015
2016
Future
University Dis2 2013–2017 31%
53%
42%
23% 23%
20%
23%
Queen Anne
2013
2013
Future
seattle 7%
2014
2014
2015
2014
Future
1% 7%
Belltown
Future2013
31%
17% 18%
30,116 Units 7% 31%
33%
2013 2014 District 2015 Future University west
23%
Future
Total Number in the King County Pipeline
16%
22%
2 23%
77% 2013 of King Total Future 2014 County 2015 Future
2015
53%
Future
2013
2015
2013
Green 5 Lake/Wallingford
13% 23%2013 2014 2015 Future 6.25 leases 14%29% 21%per 2,563 week
Future
2014
2014
green lake/ 17% 8% 6% 5% 23% wallingford 7% 24% Fremont 7%
South Lake Union 14% 17% 2015
23,192 Units
2013
Belltown
7%
2016
7%
Seattle Urban23% Pipeline
2013 per week2014
17%
Unive
17%
53%
2013 Future
24%
Future
Belltown
Future
2016
2015
53%
Future 24%
South Lake Union
Future
25%
48%
2014
7% 2,293
Capitol Hill/Eastlake 2016
Downtown CBD 2016 Future 2013 17%
17%6% 5% 2013
West Bellevue 2015
2015
2014
23%
20%
Downtown CBD 59%
Future 2014
2014
42%8% 61% 61% West Seattle 7%
3% Downtown CBD2013 4%
2,563 20% 100% 19% 3,753 2014 2015 100%2013 694 24% 100%37%2014 2013 2015 30,116 Ballard
7.75
Qu
leases per week
1,362
UNITS
2015
59%
queen anne University District 2013 Future
2015
17%
18%
9West 2015 2015 2016 Future Total SODO Seattle Future 2013 2014 leases 7% 586 774 544 0 0 1,904 1,986 per week 2013 2014 2016 Future 2013 2014 2015 2016 Future 53% UNITS 31% 41% 29% 100% 17% 18% 24% 23% 37% Capitol Hill/Eastlake 769 921 1,412 0 719 3,821 2013 2014 2015 belltown 31% 11% 20% 24% 37% 19% 100% 13% 7% 23% Downtown CBD 903 386 429 400 3,351 5,46926% 45.25 15% 14% leases 17% 7% 8% 7% 61% 100% 61% per 8% week 14% 31% Belltown 337 140 459 1,986 Future 2015 2016 Future 2014 2015 3,79402013 1050 28% 13 15.25 31% 36% 7% 17% 7% 23% UNITS 53% 100% 48% leases leases 20% South Lake UnionDOWNTOWN807 595 849 465 1078 3,794 1,904 per week per week UNITS 2013 2014 Future 2013 2014 2015 Future 21% 201516% 2016 22% 12% 28% 100% 17%Lake/Wallingford Green 550 537 970 125 111 2,293south 18% ballard 24% 23% 42% 5% 100%union 41% 31%5% lake 7%District University 432 777 498 0 770 2,477 17% 18% 17% 31% 20% 31% 100% 8% 31% 31% Queen Anne 88 796 7% 441 0 37 1,362 = 10 leases per week 7% 6% 58% 8% 32% 1% 100% 20% 61% In order to analyze absorption metrics by urban submarket, 2013 we surveyed projects in2015 lease-up Future 2014 2014 2016 Future 31% West Seattle2015 328 367 911 370 587 2,563 in each urban submarket and calculated relative lease-up velocity for the month of May. 7% 2013 2014 2015 Future 13% 14% 36% 14% 23% 100% 20% West Bellevue 114 149 942 741 1,807 3,753 3% 4% 25% 20% 48% 100% 1% back to report | Seattle SODO 183 331 0 105 75 694 19% 7% 20% 21% 26% 48% 100% 2013 2014 15%2013 201611% Future 2013 29% 2014 2015 Future 2013Future 2014 2016 20%
Ballard
7%
Future Future 19% 2016 Future 2013 2014 7% 61% Future 53% 2016 Future 12% 28% 2016 Future 61% 5% 5% Future 31% 2013 Future 1% 2016 Future 14% 23% Colliers International 2016 Future
61%
2015
2013
2016 Future 7% 61% Future Future 53% 2016 Future 12% 28% 2013 2014 2015 2016 Future 5% 5% Future 31% Future 28% 13 31% 1% leases 2016 Future per week 2013 14% 23% 2016 Future 20% 48% capitol hill Future 41% 11%
Ballard
20%
19% 20% 3,821
SODO
370 14% 741 20% 105 15%
33%
Capitol Hill/Eastlake
16%
2014
2015 29% 2015 37% 2015 8% 2015 2015 23% 2015 22% 2015 42% 2015 20% 2015 32% 2015 36% 2015 25% 2016 15%
Belltown 2013
Future
7% 37% 21% Green Lake/Wallingford 29% deliveries &Ballard absorption by urban submarket
2013 2014 Ballard 31% 41% 2013 2014 Capitol Hill/Eastlake 20% 24% 2013 2014 2015 2013 2014 Downtown CBD 17% 7% 2016 Future Total 2013 2014 As members of the 0 0 1,904 2013 2014 Belltown 17% 7% local multifamily 100% 2013 2014 South Lake Union investment/develop0 719 3,821 28% 21% 31%16% 2013 2014 19% we 100% ment community Green Lake/Wallingford 24% 23% 3,351 5,469 hear400 ‘bulk’ statistics 2013 2014 7% 61% 100% of apartment units District in University 17% 31% 0 1050 the pipeline. We are 1,986 2013 2014 41% Queen Anne 6% 58% 53% 100% providing the followUNITS 2014 465 1078 3,794 ing to give greater 2013 2014 2016 Future 2013 West Seattle 13% 14% 12%of supply 28%enter- 100% optics 2013 2014 111 ing 125 each of West Seattle’s Bellevue 2,293 3% 4% 5%submarkets 5% 100% 2013 2014 urban SODO 26% 48% 0 770 2,477
Downtown CBD
ure 3 3% ure 8%
%
West Seattle
88 6% 328 13% 114 Future3% 183 26%
UNITS Downtown8% CBD
7%
61%
29%
17%
21%
University District
Downtown CBD
7%
8%
7%
12%
16%
31% University District
22%
18%
33%
31
20%
31%
Queen Anne
South Lake Union
South Lake Union South Lake Union South Lake Union
31%
2
20%
Capitol Hill/Eastlake
SODO
5Queen Anne
We
Queen Ann
Queen Anne Queen Anne
2014
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Stats at a glance
downtown
r
A True Urban Core
$
2.4
Urbanization is no longer ‘coming’ as much as it has arrived. Just a few years ago the list of new downtown multifamily projects was slim and the aesthetics were a bit afield from modern. Currently, The Post boasts downtown/waterfront views and interior styling rivaling San Francisco and Boston. Additional projects such as Vulcan’s Martin, Harbor Urban/Goodman’s Viktoria and Holland’s 815 Pine are all centrally located and bound to set new standards for Seattle. Equity Residential’s 40-story tower at 2nd & Pine will likely continue this trend and, with the addition of Credence Equity’s tower to the north (2nd & Virginia), the eventual redevelopment of 1601 2nd Avenue and Urban Vision’s tower to the south (2nd & Pike), a new 2nd Avenue corridor of pedestrian traffic and retail opportunities will likely come into focus.
4.0
With nearly 7.5 million square feet planned, Amazon.com could have as many as 50,000 employees located in Seattle’s vibrant downtown.
Establishing Continuity Connection points in downtown are also filling in gaps, providing more continuity to Seattle’s CBD core. The Westlake Avenue corridor will not only see development by Amazon.com, but GID has broken ground on a 41-story, 335 unit tower. This will ultimately lead the way to more pedestrian traffic from the Westlake retail core to the southern entrance to SLU. Aside from delivery of exciting new housing product, renters looking to experience an urban CBD lifestyle have increased amenities with numerous restaurant openings, the new downtown Target and promises of increased waterfront access and light rail service to Capitol Hill and the U-District, all occurring as soon as 2016. Developers Security Properties, Touchstone, R.C. Hedreen Co. and the Lexas Companies all have plans for blocks traveling north-easterly from Pacific Place to Denny Way. Large scale development along this path will both connect the core of the CBD to the SLU/Cascade neighborhood and also provide opportunity for infill projects.
Colliers International | Seattle
3.5 3.0 2.5 2.0 1.5 1.0 0.0
3.8% Vacancy
5,469 units
815 Pine—386 Units Holland Partners Group Development
Completing the Urban Experience
2
average Price per net rentable square foot†
pike street
pine street
Convention Center Expansion
Development through 2017
ay olive w
Proposed Multifamily Tower
eet str ll bo re na ve
28.0% 3-year 42.0% 10-year
we ho
nu
e Touchstone Phase I & II Office Development
ee
t ar ew
st
Kinects—366 Units Security Properties Development
r st
t
Future Children’s Hospital Expansion
cumulative rent growth trend
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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N
a3
Denny Way
99
5 5 th
South downtown /Alpioneer square ka
n
1s
e Pik
2.4
t
e Av St
S
t
4.0
S bia
cypress
3.5
2.0
2.5
Yesler Way
Yesler Way
1.5 1.0 0.0
3.8% Vacancy
DESIGN COMMISSION
ue
n ve dA
ay nW
n co
ka
3.0
C
m olu Se
s Ala
Elliott Bay
2
average Price per net rentable square foot†
ng pri
The story of Pioneer Square is one of a century of character, emerging boutique retail and myriad transit options that are only increasing. As of February 2013, twelve new restaurant/retail concepts found their way to Pioneer Square, some boasting some of the best restaurateurs in the city. Transit options are the best in the city – actually the best in the West Coast, and proximity to new vitality of the waterfront is a significant draw.
694
units S Jackson St.
S Jackson Street Alaskan Way
Valkyrie
IDENTITYMINE
Stadium Place
Colliers International | Seattle
$
5
St
social venture partners
In addition to multifamily developments reaching completion, in 2011 the Seattle City Council enacted comprehensive zoning changes in south downtown and Pioneer Square increaseing height allowances, creating the opportunity for greater density of development in this part of downtown.
All eyes are on Stadium Place. Pre-leasing started in late June and occupancy is planned for September 1st.
r
The strength of the tech sector in South Downtown/Pioneer Square is leading a revitalization of this micro-market; new restaurants and retail are following closely and creating further vibrancy.
Wa y
We hold a torch high for Pioneer Square and as of late, it looks like we may not be alone. Daniels Development/Pillar Properties’ Stadium Place development will deliver its first phase in September 2013. Leasing at Stadium Place will provide great data points on the south downtown market, paving the way for residential development at Urban Vision’s 200 Occidental and Lakeside Capital Management’s Stadium Terrace. If lease rates at The Post, just ½ mile from Stadium Place, are any measure, rents are expected to meet or exceed the $3.00/SF mark.
Emergence of an Urban Community
O
OPTIMUM ENERGY
First Avenue S Occidental Ave S
as
Stats at a glance
y Wa e v li
Av e
Century Link Field
Development through 2017
I-90
28.0% 3-year 42.0% 10-year cumulative rent growth trend
Safeco Field
5 99
7
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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S Holgate St.
a4
Stats at a glance
capitol hill
r
important offerings
Robust Activity We recently heard an apartment investor call the Capitol Hill market ‘bulletproof’. At times like the present, we expect those hot on a market to exercise a bit of license in hyperbole. Yet Capitol Hill’s trifecta of attributes (CBD adjacency, unrivaled retail/restaurants walkability and cult-level coolness) proves a case of resilience to supply. Additionally, soon-to-be-open transit options (Capitol Hill Light Rail Station, Broadway Streetcar Extension) bolster confidence in this submarket’s multifamily fundamentals. With apartment leasing and sales activities brisk and jobs aplenty, land owners and developers are continuing to offer for sale recently completed apartment projects and land. Capitol Hill South Much attention has been paid to the core of Capitol Hill (Pike/Pine along 12th Avenue) as well as the TOD story in North Capitol Hill, yet we are experiencing the nascent stages of the emergence of a great neighborhood along 12th Avenue – south of E. Madison. Dubbing this stretch of real estate ‘Capitol Hill South’ its importance as a burgeoning place upon which we should bestow attention is undeniable.
> Vox Apartments > Former BMW dealership redevelopment site > Complete Automotive redevelopment site
Capitol hill South projects & happenings > Barclay Broadway Apartments (Broadway south of E. Madison) Lease-Up at $2.60+ rents > 1300 E Columbia Sales Offering, 1.5 acre lot listed for sale > 550 Broadway Ave, 220 unit development opportunity listed for sale > First Hill Street Car, Completion 2014 > Von Trapps, 11,000 square foot beer hall on 12th Ave. 2 blocks south of E. Madison > King County Youth Detention Center Site Redesign In addition to the above exciting developments on or within blocks of 12th Avenue was the September 2012 approval of the redevelopment plan for Yesler Terrace, anchoring the southern border of the 12th Avenue corridor.
$
2.2
9
average Price per net rentable square foot†
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.0
2.6% Vacancy
3,821 units Development through 2017
19.9% 3-year 50.1% 10-year cumulative rent growth trend
Capitol Hill’s myriad restaurants and retailers make it one of the most desirable neighborhoods in the city.
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Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Stats at a glance
belltown
r
Herein we make a strong argument for Belltown as a neighborhood to watch. Riding tides of high watermark multifamily/retail 20-something preference to low tide nighttime crime and thuggery, Belltown is currently poised for a shot in the arm – the good kind of shot, that is. Major projects around the neighborhood, and in the case of Bell Street—through the neighborhood, are likely in increase overall neighborhood desirability and development focus. Within Belltown many notable projects are leasing-up and breaking ground. Additionally, densification is on the rise with attractive towers adding to Belltown’s own skyline and a push to the waterfront is occurring with the opening of Schuster’s Joseph Arnold Lofts along Elliot Avenue, ground breaking on its Walton Lofts, and Pauls Corps’ development of ArtHouse along Elliot Avenue as well. Additionally, Belltown is making a march northward with completion of Harbor Urban’s Alto and breaking ground on both Wood Partners’ Third and Cedar and HB Capital’s 4th & Denny site. HB Capital’s Ed Hewson has dubbed this region “NoBel” for its northern Belltown location.
influential projects
> Development of 700 condos at 5th & Bell > Breaking ground of 3.3M square foot Amazon.com campus > Alaskan Way Viaduct Removal > Bell Street Park – Green street installation along Bell St, from 1st – 5th Avenue
$
2.4
2
average Price per net rentable square foot†
4.0 3.5 3.0 2.5 2.0
206 Bell
1.5 1.0 0.0
3.8% Vacancy
1,986 units Development through 2017
28.0% 3-year 42.0% 10-year cumulative rent growth trend
Third & Cedar Large projects, such as HB Capital’s 122-unit 206 Bell and Wood Partners’ 298-unit Third & Cedar, are redefining the skyline and aesthetic of Belltown.
Colliers International | Seattle
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Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Stats at a glance
queen anne
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Queen Anne maintains somewhat of two cultures, a boutique NIMBY-protected neighborhood oasis that is Upper Queen Anne (“UQA”); and a hodgepodge of public spaces, not-so-consistently-themed retail and Gen Y place-to-be-seen restaurant/nightlife that defines Lower Queen Anne (“LQA”). Both are on the rise vis-à-vis greater identity and inflow of development capital. Projects both lining and defining Queen Anne Avenue N in UQA, namely Seven Hills, Eden Hill and Sweetbrier, are soon to be joined by Queen Anne Town, which will be anchored by a new location for Trader Joe’s. Having similarly styled multifamily projects on either side of Queen Anne Avenue N atop the hill will add to the overall walkability of the neighborhood and hopefully not alienate those opposed to density in this highly desirable, traditionally development averse neighborhood. Progress in LQA is marked by large new developments spotting lower portions of the neighborhood. Essex’s Expo, AvalonBay’s AVA and Stream Real Estate Development’s Stream Uptown are all well into their lease ups – 275 units, 203 units, and 118 units, respectively. SRM Development’s Astro (212 units) will break in September. Spotted across the LQA landscape are seven other projects ranging from 20 – 80 units, all in various stages of development. On the sales side, in UQA the Gilbert sold in June 2013 at $546 per square foot, and in April 2013, the Elliot Bayview set a record in the city for sub50 unit buildings, marking a sales price cresting $518 per square foot.
$
2.2
4.0 3.5 3.0 2.5 2.0
Essex Expo
AvalonBay AVA
1
average Price per net rentable square foot†
1.5 1.0 0.0
2.7% Vacancy
1,362 units Development through 2017
24.1% 3-year 47.8% 10-year cumulative rent growth trend
Essex’s Expo and AvalonBay’s AVA are establishing hubs for development in LQA.
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Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Stats at a glance
south lake union
r
South Lake Union may hold a Guinness Book World Record for 0-to-neighborhood in no time flat. The previous cycle saw a wave of development predominated by office space. Multifamily was a component, yet not the driver. In the current cycle, multifamily is taking a starring role and the recent up-zone will play an increasingly important role in development activities. For sake of discussion, we bisect SLU into three quadrants, SLU West, SLU Central, and SLU East – all bounded by Lake Union to the north and Denny to the South. SLU West (as of late anecdotally called “Little Holland”) is bounded by SR-99 and 9th Avenue N. The Holland nomenclature is born out of 670 multifamily units simultaneously and contiguously developed by Holland Residential: Union, True North and Hue. SLU West is also home to multifamily development by Wolff, 200 units planned at 8th & Republican, and MacFarlane Partners, 183 units planned South Lake Union Multi-family Developments at 8th & Thomas. As the least developed slice of SLU, lake union going forward we expect to see the greatest amount of not yet announced development activity in this quadrant in years to come. Defining the center slice is SLU Central, encompassing 9th Avenue N easterly to Fairview Avenue N. Vulcan’s Rollins Street Flats, developed in the previous cycle as a condominium project, was one of the first modern multifamily projects to land in SLU. Much has changed since then, even the economics. As a high watermark land sale, in February 2013, MacFarlane Partners paid just over $70k/unit for 201 Westlake Ave. N, an unentitled parcel kitty-corner to Rollins Street Flats. Tarragon is in the process of completing Boxcar and Greystar has a 282 unit project in pre-development. There is belief that 105 Fairview Avenue N will be sold to a condo developer.
SLU east
valley st
2
average Price per net rentable square foot†
4.0 3.5 2.5 2.0 1.5 1.0 0.0
3.8% Vacancy
3,794 units
mercer st
SLU central SLU West fairview ave n
Development through 2017
28.0% 3-year 42.0% 10-year cumulative rent growth trend
denny way
Existing
Colliers International | Seattle
2.4
3.0
westlake ave n
Finally, SLU East, appropriately referred to by it’s given name – Cascade neighborhood, covers east of Fairview Avenue N to I-5. This section of SLU has the greatest density of multifamily units. From 2004–2006, Vulcan developed Alley 24 and Alcyone, AMLI built AMLI 535 and SeaMark developed the Cairns, all totaling just over 600 units. Currently, there are several multifamily developments in progress, totaling near 1,400 units. All told, SLU East is planned to host 2,000 apartment units in a neighborhood than had almost no market rate multifamily housing 10 years ago.
$
Under Construction
11
Planned
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Stats at a glance
green Lake/wallingford/fremont
r
Green Lake—Green Lake proper has not seen delivery of any substantial projects during the current cycle. Resurrection of Lorig Associates’ Green Lake Village is a good bellwether of the return of development to this market. At 297 units and encompassing 50,000 SF of retail with a PCC grocery, this project will make a major impact on the Green Lake neighborhood. Wallingford—Wallingford is one of the most desireable neighborhoods in Seattle and development is artificially constrained by small parcels and low density zoning. The retail corridor along N 45th Street continues to add great restaurants and boutique retail, contributing to the already desirable nature of the neighborhood. Development on either end of the stretch of N 45th bounded on the West by Stone Way and the East by I-5 offers the strongest development potential that is neither captured by the Stone Way N micro-market or the U-District sub-market.
$
2.2
Fremont—Much like Wallingford, Fremont does not offer parcels that foster large development opportunities; however, another phenomenon is developing – the linkage between Fremont and Ballard. Locals are calling this area Ballmont, Frelard or So-Ba (‘South Ballard’). Restaurants, bars and retail are reaching south from Ballard and north from Fremont to connect the two. Kauri Investment’s recently completed Rev Fremont is one such project to live in Fremont, yet avail itself of adjacency to So-Ba.
4.0
A New Micro-Market
3.0
Greenlake, Wallingford and Fremont, although distinct submarkets, are often grouped together for the sake of ease and as a result of proximity. Interestingly, Stone Way N, a connector between the markets, has emerged as a micro-market itself. During the cycle defined as 2012–2017, and between N 34th Street and N 43rd Street, over 800 units are planned for delivery fronting Stone Way N alone. This figure does not even include projects located proximate to, but not facing Stone Way N. This micro-market is also the home to remarkable non-multifamily development. Notably, Skanska is developing Brooks Running Shoes’ new national headquarters at Stone Way N and N 34th Street and directly to the north is the Fremont Collective. The Freemont Collective hosts one of Seattle’s most innovative retailers, Evo, and is home to two leading restaurants in Seattle, Joule and The Whale Wins.
projects
3.5 2.5 2.0 1.5 1.0 0.0
1.7%
Vacancy
2,293 units
Fremont Collective
> Noble, New York Life Insurance Co, 93 units > Pillar Properties Stone Way, RD Merrill, 125 units > Prescott Wallingford, TIAA-CREF, 154 units > 3636 Stone Way N, Harbor Urban, 138 units > 3801 Stone Way N, Lexas Companies, 284 units > Wally, Lake Union Partners, 27 units
Development through 2017
10.7% 3-year 51.4% 10-year
Additionally, just off of Stone Way, Goodman Real Estate developed the 52 unit Collage, Harbor Urban is in pre-development on two project totaling 329 units and AMLI is developing the 240 unit AMLI Wallingford.
Colliers International | Seattle
8
average Price per net rentable square foot†
cumulative rent growth trend
Brooks Headquarters
12
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
back to report
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university district
With mass transit scheduled for completion to the University District by 2016, many opportunities will emerge for market rate projects.
The University District is unique in that there are few geographic lines of demarcation between student housing and market-rate housing. Over the years, University of Washington’s stock of student housing has aged and at the same time, multifamily developers were not keen on delivering a large amount of multifamily in the U-District. A shift has occurred, for both types of housing developers, and the U-District is set to receive a sizable quantum of both student housing as well as market-rate housing. Market Drivers Developing adjacent to a university in any region has its pros and cons. Unique to the U-District are: proximity to waterfront, adjacency to great neighborhoods such as Wallingford, Roosevelt and Fremont, and as of 2016 service by light rail. As a result of such drivers, it is likely that the U-District will see continued increase in density in both market-rate housing, as well as student housing.
Stats at a glance
r
$ average Price per net rentable square footâ€
1.74
AVA University District
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.0
1.6% Vacancy
2,477 units AVA University District is a 283 unit market rate project that is set for delivery by Fall 2013.
projects in the pipeline > > > > > > >
Development through 2017
12th Avenue Studios, Triad Capital Partners, 101 units 41st Street Studios, Triad Capital Partners, 104 units 5000 University Way NE, Cohanim LLC, 125 units AVA University District, AvalonBay, 283 units Brooklyn Place, Coho Real Estate, 180 units Brooklyn Place, Horizon Realty Advisors, 84 units Curve, Security Properties, 184 units
5.1% 3-year 34.5% 10-year cumulative rent growth trend
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
Colliers International | Seattle
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Stats at a glance
west seattle West Seattleites love living in West Seattle. Loved for wonderful views, suburban-esque neighborhood atmosphere and until recently, relatively little urbanism. In the current real estate cycle, the last of the aforementioned attributes has changed quite markedly. As recently as 2009, West Seattle’s apartment inventory totaled approximately 2,500. This figure is slated to nearly double by 2017.
r
Legacy partners recently unveiled Youngstown Flats in West Seattle.
Youngstown Flats
$ average Price per net rentable square foot†
Much of West Seattle’s development is occurring south of an imaginary line, if one was carried latitudinally from the West Seattle Bridge. This trend was started in the last cycle by projects such as Harbor Urban’s Link and Mural and CAPCO Investments’ Altamira. All located at or near The Junction, this location remains a focal point. Equity Residential is planning a 206 unit project at the geographic nexus of The Junction, and Wolff Company has an 86-unit project 200 feet due south.
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.0
2.5% Vacancy
2,563 units Madison Development spruce West Seattle 216 Units
Alliance reisdential 4745 40th Avenue SW 160 Units
fauntleroy way sw
sw alaska street
40th ave sw
Creating another micro-market of multifamily in West Seattle are Lennar Multifamily Investors, Madison Development and Alliance Residential, all contributing projects within a block of another that will add nearly 800 units. These developments will bring the excitement of a ‘there-there’ off of California Avenue SW and will be home to some great retail additions to West Seattle.
1.6 9
Development through 2017
Lennar Multifamily 4755 FAUNTLEROY WAY SW 370 Units
10.7% 3-year 46.1% 10-year cumulative rent growth trend
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Stats at a glance
ballard
r
Ballard has emerged as one of the most popular neighborhoods in the region for young individuals and families alike. Trendsetters, hipsters, young professionals and everyone in-between have flocked to this neighborhood in recent years – and multifamily developers have responded quickly. Ballard’s stock of ~1,000 units remained unchanged from the mid-1990s until 2008. Inventory growth from 2008 to 2017 is forecasted at nearly 250%.
$ average Price per net rentable square foot†
Notably, the majority of Ballard’s growth in apartment stock has occurred close-in, with much of it being delivered on NW Market Street or within a block of this major Ballard arterial.
Multifamily Developments > > > > > >
AMLI Ballard, AMLI, 304 units AVA Ballard, AvalonBay, 265 units Ballard Tallman, Equity Residential, 303 units Ballard West, Pryde + Johnson, 111 units Broadstone Koi, Alliance Residential, 166 units Market Street Landing, Equity Residential, 287 units
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.0
Kolstrand Building Voltera
Interestingly, for all of the boutique retail, a large percentage of new multifamily stock in Ballard are larger projects built by regional and national developers. Many of these same developers are in other Seattle urban neighborhoods, yet they face less competition from local developers, the likes of which are delivering projects in neighborhoods such as Capitol Hill and Queen Anne.
2.3% Vacancy
1,904 units Development through 2017
33.7% 3-year 94.5% 10-year
With continual openings of high cache restaurant and retail concepts, Ballard is poised to continue its growth. Fears of oversupply are echoed often at this point in the cycle, so many will pay close attention to absorption figures in order to assess how the market reacts is the delivery of nearly 2,000 more units to this submarket.
cumulative rent growth trend Ballard’s hip vibe and great retail concepts have created cache for this once sleepy Scandinavian seafaring community, resulting in high demand from a well-heeled renter demographic.
Colliers International | Seattle
2.1 3
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Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Stats at a glance
west bellevue
r
4
106th ave ne
5
1.9 4
main street
2
3
6
4.0 3.5 3.0 2.5
1. Soma Tower I & II, SU Development, 273 units (combined) 2. 10505 Main Street, Alamo Manhattan, 260 units 3. Bellevue at Main, SRM Development, 260 units 4. Main Street Gateway, Vander Hoek Corp, 369 units 5. Bellevue Park II, Cantera Development Group, 160 units 6. The Ventana, For Sale, 79 units
Kemper Development Company announced that they will go forward with their mixed-use expansion, which will begin in 2014 and will be completed by fall 2016. At a cost topping $1.2B, the project will add 2 million square feet: 375,000 square feet of new retail, dining, and entertainment spaces; 700,000 square feet dedicated to new Class-A office space; and on the residential side, a 250-room boutique hotel and approximately 500 high-end residential units. The project will include 3,700 parking spaces in two 6-level underground parking garages.
Colliers International | Seattle
average Price per net rentable square foot†
1
105th ave ne
A major milestone for West Bellevue was reached in approval of the East-Link light-rail route in the Spring of 2013, providing for an elevated downtown station on Northeast 6th Street, near City Hall and Meydenbauer Center. Having a direct transit route from downtown Belleuve to Seattle is a seminal step in connecting both major employment/ amenity hubs and provides developers and investors alike confidence and direction regarding paths of progress.
$ bellevue way ne
Similar to Seattle, development projects in West Bellevue are heading south. 2008-2010 brought several key deliveries on the north end of West Bellevue. Although there is no absence of new development projects in the north of Bellevue’s downtown, Main Street is anchoring, or providing adjacency, to notable projects. Projects within 1 ½ blocks of the intersection of Main Street and Bellevue Way are set to deliver over 1,400 units by EOY 2016.
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2.0 1.5 1.0 0.0
3.1% Vacancy
3,753 units Development through 2017
21.9% 3-year 54.4% 10-year cumulative rent growth trend
Based on data provided by Dupre + Scott †Average rent for buildings with 50+units, built after 1950
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Colliers Multi-family team As multifamily brokers in Seattle/Puget Sound, we pay close attention to the urbanization of Seattle and its close-in neighborhoods. The intention of this study is to provide clearer optics into trends in Seattle’s urban neighborhoods and thereby assist clients with investment theses for the development, acquisition and disposition of multifamily assets. We represent over 50 years of combined commercial real estate experience, covering more than $2B in transaction volume in the Puget Sound region. Our team provides the experience and guidance to assist clients in making the smartest transactions. We look forward to working with you. With nearly 90% of King County’s new multifamily development slated for urban districts, never has it been more important to study emerging trends on a micro-market level, as well as take into consideration interplay between all asset classes – including retail and office.
Dylan Simon Associate
Dave Schumacher Senior Vice President
» Represents buyers/sellers of multifamily assets
» 35 years of multifamily sales experience
» With the desire to understand every facet of a transaction, Dylan develops an expertise in each assignment and an unwavering dedication to client service.
» Over $2 billion in multifamily transactions
» Prior to joining Colliers, Dylan practiced law for nine years and was a successful real estate investor and developer
» Strong client relationships with the leading pension fund advisors, REITs, and large syndicators as well as high net worth individuals and families
» Having a multidisciplinary background, Dylan provides clients with a depth of experience in asset analysis, financial underwriting, market analysis and deal negotiation
» Rookie of the Year in his first year » Remained the top apartment broker in the Seattle office for most of his 14 year tenure
David W. Mortensen
Kate Lee
Senior Associate
Project Marketing Manager
» 11 years experience in multifamily sales
» Provides project management support for all of the team’s marketing and sales efforts
» Represents buyers/sellers in market-rate apartments, student housing multifamily land and condominium conversions. » CoStar Power Broker in 2011
» Started in multifamily industry with Holland Residential and was a part of the Investment Management Team working on acquisitions and dispositions » Responsible for providing and tracking due diligence items
» Top 5 Broker in the Colliers Northwest region
» This includes obtaining materials for the brokers, title companies, lenders, and equity partners
» Technical expertise in apartment value analysis and tireless marketing efforts have proven invaluable to his clients
» Creates investment summaries on potential deals and sales collateral
Colliers International | Seattle
Dave Schumacher Senior Vice President direct 206 382 8555 mobile 425 985 8528 dave.schumacher@colliers.com David Mortensen Senior Vice President direct 206 382 8554 mobile 206 604 6118 david.mortensen@colliers.com
» Widely recognized as one of Seattle’s top apartment brokers
» 1990 Top CB investment broker in the country
» Expert in financial and market analysis
Dylan P. Simon Associate direct 206 624 7413 mobile 206 414 8575 dylan.simon@colliers.com
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