Colliers multifamily market report (q4 2012)
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Transcript of Colliers multifamily market report (q4 2012)
Colliers International601 Union St., Ste 5300 | Seattle, WA 98101 www.colliers.com
FOURTH QUARTER 2012
Research & Knowledge Report
David W. MortensenSr. Associate206 382 8554 [email protected]
Dave SchumacherSr. Vice President206 382 [email protected]
Seattle Multifamily
Dylan P. SimonAssociate206 624 [email protected]
SaleS
volume
research & forecast reportCollierS international | Seattle
www.colliers.com/seattle
average vacancy is below 5% throughout the puget sound. King county is down to 4.2% and seattle cBD vacancy is a surprisingly low 2.3%. this exceptionally strong demand has naturally led to robust rent growth, with the strongest starting at the urban centers and spreading out to the suburbs. Devel-opers have responded to this demand with a very full pipeline. New development and employment, the key indicators of supply and demand, are the questions on everyone’s mind at the moment and we explore them in depth in this report.
market indiCatorS
2012 2013
vaCanCY
Cap rateS
ConStruCtion
rentS
Q4 2012 | multiFamilY
Strong Demand Means Rent Growth and New Development
020406080
100120140160180
King Snohomish Pierce
$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
King Snohomish Pierce
020406080
100120140160180
King Snohomish Pierce
$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
King Snohomish Pierce King snohomish pierce
King snohomish pierce
keY indiCatorS• Gross sales volume ($) in puget sound is
up 126% over the last year.• cap rates have fallen to a 5.6% average in
2012, coming off a 6.2% peak in 2010, yet nearly 100 bp off a record low of 4.8% in 2007.
• record setting pricing with aspira obtaining >$500k/door, with average price per door at $152k in King county, up 16% year-over-year.
• tri-county vacancy remained flat year-over-year at 4.7%, yet the King county vacancy rate dropped to 4.2%.
• 32% of properties are offering conces-sions, down from the 2010 peak of 61.1%.
SupplY and demand• a total of 5,628 units were added in 2012• We project 24,000 more units will be
added 2013-2016.• over 46,000 jobs were added to seattle-
Bellevue-everett in 2012.• the seattle-tacoma-Bellevue unemploy-
ment rate is 6.9% while the national unem-ployment rate is 7.9%.
• economicforecaster.com projects a steady decline in the puget sound unemployment rate from 7.4% in 2013 to 7.0% in 2014, 6.6% in 2015 and 6.4% by the end of 2016 with nearly 210,000 jobs added in that time.
number of Sales Sales volume ($)
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 3
puget Sound market vaCanCY vS. unemploYment rate
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
1986.1
1987.1
1988.1
1989.1
1990
.1
1991.
1
1992
.1
1993.1
1994
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1995.1
1996.1
1997.1
1998.1
1999.1
20
00
.1
20
01.
1
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06.1
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08.1
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09.1
20
10.1
20
11.1
20
12.1
Puget Sound Market Vacancy Vs. Unemployment Rate
Market Vacancy Unemployment Rate
Vacancy and Unemployment were nearly in lockstep until 2009. Since 2009, the spread has increased from an average ½ point to 3 percentage points
a ShiFt in demandNationally, the vacancy rate is 4.6% as of Q3 2012, an extremely healthy rate considering peak vacancy of 8.0% in June 2009. the national vacancy rate has only dropped below 5% three times in the last 30 years, according to reIs. average vacancy in the puget sound area is 4.7%, but the seattle area rental market is even tighter. King county vacancy has compressed to 4.2% and seattle cDB vacancy is at a surprisingly low 2.3%.
In the past, the vacancy rate tracked almost exactly with the unemployment rate in this area, illustrating the strong correla-tion between employment and apartment demand. however, it appears that a fundamental shift is taking place in the rental market at the moment. With unemployment now at 6.9%, one would expect vacancy to be between 6.4% and 7.4% since the two metrics have typically been within half a point of one
another in the past. Instead, vacancy is below 5% in the puget sound and the spread between unemployment and vacancy has averaged 3 basis points since 2009. that is a huge shift in renter behavior. as indicated by the chart above, vacancy is surprisingly low right now compared to where it would normally be given the current unemployment. that indi-cates extraordinarily high demand by historical standards. the chart below is another sign post indicating a shift in renter behavior. In 1999, 33.1% of households in the seattle Bellevue everett Msa were renters. today, that figure is 40.5%. these figures are further bolstered by o’conner consulting research concluding that measureable apartment demand implies 60% of new seattle residents are renters compared to a 50/50 historical norm.
Demographic shifts certainly account for some of this shift. Baby boomers’ lifestyles are changing, and many thousands of “Generation Y” are coming of renter age in this market. It is still more difficult than it was to buy a home, and many former home owners are opting to be renters or have been forced to rent after foreclosures. It remains to be seen how permanent this shift in renter demand will prove to be.
perCentage oF renterS in the Seattle mSa
30%
32%
34%
36%
38%
40%
42%
The percentage of renters in the Seattle MSA has increased to 40.5%, the highest level ever recorded.
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 4
emploYmentIn the development community there is no better medi-cine for concerns with inventory than job creation. In this region, the rule of thumb is 8 new jobs adds demand for one new apartment unit. for example, 52,722 jobs were added to the tri-county area in 2012 which translates to demand for 6,590 units. conway & pedersen (economicforecaster.com) predicts 46,000 jobs have been added to the seattle-everett-Bellevue Msa in 2012; compared with 30,000 new jobs in 2011. In the next five years, conway pedersen predicts nearly 210,000 new jobs added in the region.
our local employment market is on a tear and may well exceed those projections. amazon hired 22,500 people worldwide last year and has an estimated 2,300 local positions available. Boeing hired about 8,000 workers last year in the seattle area and apparel retailer Nordstrom added 7,500 people nationally in 2011.
puget Sound unemploYment and population ForeCaStSPuget Sound Unemployment and Population Forecasts
source: economicforecaster.com
1,250,000 1,350,000 1,450,000 1,550,000 1,650,000 1,750,000 1,850,000 1,950,000 2,050,000 2,150,000
0.01.02.03.04.05.06.07.08.09.0
10.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Unemployment Rate Population
Around 49,000 new jobs are forecast for 2013 in this region; quite a lot by historical standards. At the same time, population is expected to increase by 54,000; 22% more than the 20-year average population growth.
prediCting SupplYover the past 20 years, developers have added an average 3,200 market rate apartments per year in the King, snohomish and pierce counties – the “tri-county” region. 2012 is ending with 5,628 new units, according to Dupre+scott (duprescott.com). as many as 8,220 new units are under construction or planned for 2013, 10,887 units in 2014, 8,069 units in 2015 and 3,093 units in 2016 for a total potential of 30,269 new units in the next four years; 137% higher than the his-torical average for that period. for our supply projec-tions, we assume that 100% of units “Under construc-tion” will be completed. projects that have not yet broken ground and have not locked financing are much less certain, so we handicap projects in planning. We assert that 75% of those projects in planning for 2013 and 2014 will be built, and 65% of those in planning for 2015 and 2016 will be built. our adjusted total new supply for 2013-2016 is 24,016.
5,628
8,033 8,898
5,075
2,010 -
2,000
4,000
6,000
8,000
10,000
12,000
2012 2013 2014 2015 2016
Completed Under Construction Planned Projected
In the tri-county area, 5,628 units were completed in 2012 and 30,269 units are under construction or planned for 2013-2016 according to Dupre+Scott We speculate that 24,016 of those will actually be completed in that time.
projeCted deliverieS in king and SnohomiSh CountieS
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 5
projeCted new SupplY over 20 YearS
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Bellevue West
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
West Seattle
02,0004,0006,0008,000
10,00012,00014,00016,000
Belltown, Downtown, S. Lk. Union
0500
1,0001,5002,0002,5003,0003,5004,000
Ballard
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Bellevue East
0
50,000
100,000
150,000
200,000
250,000
300,000
Puget Sound pUGet soUND
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Bellevue West
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
West Seattle
02,0004,0006,0008,000
10,00012,00014,00016,000
Belltown, Downtown, S. Lk. Union
0500
1,0001,5002,0002,5003,0003,5004,000
Ballard
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Bellevue East
0
50,000
100,000
150,000
200,000
250,000
300,000
Puget Sound
West seattle
BellevUe West
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Bellevue West
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
West Seattle
02,0004,0006,0008,000
10,00012,00014,00016,000
Belltown, Downtown, S. Lk. Union
0500
1,0001,5002,0002,5003,0003,5004,000
Ballard
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Bellevue East
0
50,000
100,000
150,000
200,000
250,000
300,000
Puget Sound
BallarD
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Bellevue West
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
West Seattle
02,0004,0006,0008,000
10,00012,00014,00016,000
Belltown, Downtown, S. Lk. Union
0500
1,0001,5002,0002,5003,0003,5004,000
Ballard
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Bellevue East
0
50,000
100,000
150,000
200,000
250,000
300,000
Puget Sound
BellevUe east
examining SupplY: where, when & wholooking at the raw numbers in the previous section, there is certainly reason for some oversupply concern in the near term. however, we contend that the analysis is much more complex. the impact of oversupply must be based in the questions of where, when & who.
where
When you break it down, it appears that most of the new supply seems to be focused in urban locations. some of these areas had only small rental markets before this cycle and are really creating brand new urban villages, such as Ballard, south lake Union and Downtown Bellevue. this suggests that an analysis of oversupply must be conducted at the submarket or even micro-market level.
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Bellevue West
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
West Seattle
02,0004,0006,0008,000
10,00012,00014,00016,000
Belltown, Downtown, S. Lk. Union
0500
1,0001,5002,0002,5003,0003,5004,000
Ballard
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Bellevue East
0
50,000
100,000
150,000
200,000
250,000
300,000
Puget Sound BelltoWN, DoWNtoWN, soUth laKe UNIoN
245% increase over 20 years. 20 years ago, no one lived in downtown Bellevue. That is changing this cycle and dramatically. Urban living in Bellevue is all new and welcome.
1% increase over 20 years. With the condo conversions that took place in the last cycle and the lack of developable land, rental supply in Bellevue east of 405 has been essentially flat.
32% increase over 20 years (avg 1.5%/yr). The region will take this cycle’s new sup-ply in stride.
280% increase over 20 years. Downtown highrises and rentals in South Lake Union are new phenomena resulting in two essentially new markets.
87% increase over 20 years. Rental housing development has hit its stride in this cycle, but it is not especially outsized in West Seattle.
243% increase over 20 years. With only 1,000 rental units in Ballard just a few years back, Ballard is clearly creating a brand new urban village.
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Bellevue West
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 6
when
With demand as high as it is, when might oversupply become a concern? regionally, we are quite comfortable with 4.7% vacancy at the tri-county level, 4.2% in King county and 3.3% in seattle. as far as predictions, we agree with Dupre+scott. We expect to see an upward trend in vacancy starting around Q2 2014, peaking from Q4 2014 through Q1 2015 and then trending down again.
Interestingly, Dupre+scott forecasts no rent decreases in this period, with rent growth merely slowing for the period between Q4 2014 to Q1 2015. conces-sions are predicted to peak just below 2.5% in Q1 2015, steadily declining thereafter as owners work through lease-up to stabilization.
who
the shift in demand we spoke of before is being affected by “Generation Y”, born 1982 to the early 2000’s. a lot of the new supply is designed to attract this demographic, and the tremendous growth of this market will have impact the degree of oversupply. In the puget sound region alone, 60,000 to 100,000 Gen Y’ers will enter the region’s housing market between 2012 and 2016.
Source: Dupre+Scott
Gen Y’s desire for an urban lifestyle translates to apartments; at least until “condo” is no longer a dirty word (we will discuss that in our next report). Baby Boomers are also flocking to the cities in increasing numbers. then comes the question of affordability. Dupre+scott reports that in the current environ-ment, it could be up to 40% cheaper to own a median-price condo versus rent the average two-bedroom, two-bath apartment in King county. conway pedersen cites that housing affordability is now at a five-year high. a contrary report by Interest.com concludes that seattle is the 17th least affordable market in Us even though the seattle area has the fifth highest median household income in the nation at $64,025.
gen Y (number oF people 20-34 YearS old; tri-CountY)
900,000
850,000
800,000
750,000
700,000
650,000
600,000
1984
1988
1992
1996
2000
2004
2008
2012
2016
popu
latio
n 20
-34
year
s ol
d
EVERETT
MILL CREEK
LYNNWOOD
EDMONDS
SEATTLE
SNOHOMISH
MONROE
REDMOND
ISSAQUAH
BELLEVUE
WOODINVILLEBOTHELL
RENTON
TUKWILA
SEATAC
FEDERAL WAY AUBURN
BURIEN
PUYALLUP
TACOMA
GIG HARBOR
KENT
Snohomish County
Eastside
Greater Seattle
Southend
Pierce County
eastside top employers
greater Seattle top employers
Snohmish County top employers
Southend top employers
> Microsoft> Nintendo > Costco Wholesale> Expedia Inc> Esterline Technologies
> Symetra Financial> Data I/O Corp > Concur Technologies> Clearwire Corp> Google
> The Boeing Company> Port of Seattle> Providence Health> Valley Medical Center> Weyerhaeuser
> Paccar Inc / Kenworth> Alaska Air Group> IKEA> REI> Mikron Industries
> University of Washington> Amazon.com> King County Government> Group Health Cooperative> Nordstrom Inc > Swedish Medical Center
> Starbucks Corp > Perkins Coie > Expeditors International > Real Networks Inc > Bill & Melinda Gates Foundation > Russell Investments
> The Boeing Company> Naval Station Everett> Providence Regional Medical Center> Premera Blue Cross> Tulalip Tribes> Philips Medical Systems
> Zumiez> Aviation Technical Services> Rinker Materials NW> Fluke Corp> Intermec
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 8
Greater seattle
vacancy cap rates construction rents
2012
2013
•average rents in the Greater seattle submarket are up 6.5% year over year to $1,248. Greater seattle has the lowest average vacancy in the region at 3.16%. average rents have remained below 4% since Q3 2010.
•seattle ranked 7th in the nation for private-sector job growth in 2012. the city has added 49,100 private-sector jobs between october 2011 to october 2012. (puget sound Business Journal, 12/14/12)
•seattle’s recovery is outpacing much of the U.s., according to Matthew Gardner with Gardner economics, seattle is second only to silicon valley as the strongest market on the West coast. (seattle Daily Journal of commerce, 12/13/12)
•In a recent report conducted by payscale Inc., seattle ranked No. 1 for Generation Y workers (ages 18 to 29), because of its strong wage growth and abundance of tech firms. (puget sound Business Journal, 8/21/12)
•according to a recent study by the Bay area council economic Institute, Washington has the highest concentration of technology jobs in the U.s., more than double the national average at 11.4%. each high-tech job has a multiplier of four more jobs. (Geekwire.com 12/7/12)
•technology’s impact in seattle continues to manifest itself in the south lake Union submarket where amazon’s growth has spawned activity in office, retail and residential.
$900
$950
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Greater Seattle Average Rent
$800
$850
$900
$950
$1,000
$1,050
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Snohomish County Avg Rent
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
$1,400
$1,450
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Eastside Average Rent
$750
$800
$850
$900
$950
$1,000
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Southend Average Rent
greater Seattle average rent
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%Q
3 00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Gr Seattle Market Vacancy
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%
10.00%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Snohomish Co Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Eastside Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Southend Market Vacancy
greater Seattle market vaCanCY
Snoho Southend
Eastside Seattle
0
200
400
600
800
1000
1200
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
200
400
600
800
1000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
greater Seattle market development
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 9
eastside
vacancy cap rates construction rents
2012
2013
• Eastsideaveragerentscontinuetobethehighestintheregionat
$1,425. rents have increased 9.45% year over year and vacancy is down to 4.4%.
• DowntownBellevuehasabsorbedmostofthedevelopmentthatoccurred well into the recession, prompting developers to revive stalled office, retail and residential development plans. top on the list is the expansion of lincoln square with 545,000 sf of office space, 392,000 sf of retail, a 120-room hotel and 200 condo/apartment units. (Seattle Times, 12/8/12)
• Construction on East Bellevue’s Spring District mixed-usedevelopment is slated to begin in 2013, when Wright runstad will start two office buildings totaling 490,000 sf. the first phase calls for 560 residential units and six office buildings. Ultimately the spring District is expected to bring 13,000 office workers, 2,135 residents and 10,000 parking spaces to the 16 block site centered around a light rail station. (seattle Daily Journal of commerce, 9/11/12; puget sound Business Journal, 12/3/12)
• Constructionhasbegunonthefirstphaseoftherevitalizationofthe south Kirkland park and ride. this transit oriented development will add 242 apartments, 7,000 sf of retail and a 532-stall commuter parking garage adjacent to low-rise office buildings in Kirkland and housing in Bellevue. (seattle Daily Journal of commerce, 10/17/12)
• Google has been growing by double-digit numbers in Kirklandwhere the company built a three-building complex it began occupying in 2009. the company is also looking for more space in anticipation of continued growth in both seattle and the eastside. (seattle times, 9/17/12)
• Issaquah’s City Council recently adopted the Central Issaquahplan, which paves the way for a dense urban core with buildings up to 10 stories. high-density urban villages in planning include rowley’s hyla crossing and rowley center as well as lakeside Industries’ lakeside hillside village which could eventually bring 9,000 new homes and 19,000 jobs to Issaquah.
$900
$950
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Greater Seattle Average Rent
$800
$850
$900
$950
$1,000
$1,050
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Snohomish County Avg Rent
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
$1,400
$1,450
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Eastside Average Rent
$750
$800
$850
$900
$950
$1,000
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Southend Average Rent
eaStSide average rent
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Gr Seattle Market Vacancy
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%
10.00%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Snohomish Co Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%Q
3 00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
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Q3
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Q3
11
Q3
12
Eastside Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Southend Market Vacancy
eaStSide market vaCanCY
Snoho Southend
Eastside Seattle
0
200
400
600
800
1000
1200
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
200
400
600
800
1000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
eaStSide market development
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 10
southend
vacancy cap rates construction rents
2012
2013
• Southendaveragevacancy isdownto5.2%.Average rentsaretrending up and are currently at $932.
• Boeingannouncedrecorddeliveriesandordersforthe737airlinerduring 2012. to date, Boeing has 1,031 net orders for the 737, which is assembled in the renton facility. (Puget Sound Business Journal, 12/4/2012)
• Tukwila South project update. The newly opened Southcenterparkway extension not only provides another route to the state’s largest mall, Westfield southcenter, but also provides better access to the 200-acre tukwila south development project. as we reported in our last issue, this project has the potential for 10 million square feet of office/industrial buildings and 2,000 housing units. the developer, segale properties, has begun grading and infrastructure work on the property. (Daily Journal of Commerce, 11/28/12)
• Renton’sQuendallTerminals,a21-acreprojectonthesoutheastshore of lake Washington, is the largest undeveloped shoreline parcel on the lake. this superfund site is still awaiting approval from the enivronmental protection agency, but the developers hope the cleanup will occur concurrent with the re-development. the plan calls for 692 residential units, 30,600 square feet of retail and restaurant space over 1,300 parking stalls in 10 buildings. (Puget Sound Business Journal, 10/24/12)
• The city of Tukwila recently approved a land sale/developmentagreement for tukwila village which will include 380 housing units, 20,000 square feet of office space, 11,000 square feet of retail, a community plaza, police resource center, indoor community commons and a library. the goal is to start construction in 2013 and have the development completed by the end of 2015. (Daily Journal of Commerce, 10/26/2012)
$900
$950
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Greater Seattle Average Rent
$800
$850
$900
$950
$1,000
$1,050
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Snohomish County Avg Rent
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
$1,400
$1,450
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Eastside Average Rent
$750
$800
$850
$900
$950
$1,000
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Southend Average Rent Southend average rent
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Gr Seattle Market Vacancy
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%
10.00%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Snohomish Co Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Eastside Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Southend Market Vacancy Southend market vaCanCY
Snoho Southend
Eastside Seattle
0
200
400
600
800
1000
1200
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
200
400
600
800
1000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
Southend market development
research & forecast report | Q4 2012 | MultiFaMily
CollierS international | p. 11
snohomish county
vacancy cap rates construction rents
2012
2013
• Snohomish County average vacancy rate is down to 4.6% andrents are up at $984, a 2.7% increase year over year.
• InOctoberBoeingraisedits2012profitforecastfortheyearandanticipates beating its delivery target. (Seattle Times, 10/24/12) Boeing has a total backlog of airliner orders of $374 billion and its production runs are sold out through 2016.
“Aircraft utilization is at record highs as are global
load factors. Growth in people traveling is happening
faster now that new capacity is being introduced.
These are fundamental indicators that show that
the aviation market is healthy and perhaps even a
little underserved,” said Kostya Zolotusky, managing
director of capital markets development and leasing
at Boeing Capital Corp.
“We expect that despite economic and political
challenges, global air travel will again demonstrate
its remarkable resilience in 2013. The industry’s
global growth and airlines’ fleet replacements,
accelerated by higher fuel prices, should keep
demand stable and attract sufficient financing,”
said Zolotusky.
(Boeing.com, 12/4/12)
$900
$950
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Greater Seattle Average Rent
$800
$850
$900
$950
$1,000
$1,050
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Snohomish County Avg Rent
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
$1,400
$1,450
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Eastside Average Rent
$750
$800
$850
$900
$950
$1,000
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Southend Average Rent SnohomiSh CountY average rent
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Gr Seattle Market Vacancy
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%
10.00%Q
3 00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Snohomish Co Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Eastside Market Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Q3
00
Q3
01
Q3
02
Q3
03
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Southend Market Vacancy SnohomiSh CountY market vaCanCY
Snoho Southend
Eastside Seattle
0
200
400
600
800
1000
1200
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
200
400
600
800
1000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014 2015 2016
Completed Under Construction Planned
SnohomiSh CountY market development
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2.8%
2.4%
4.1%
2.0%
3.9%
3.8%
5.4%
4.5%
5.8%
3.8%
3.5%
3.5%
4.7%
4.8%
S out
hend
7.9%
7.8%
8.2%
7.4%
6.4%
5.9%
5.0%
4.9%
4.6%
5.0%
6.5%
7.8%
7.8%
7.3%
6.5%
5.2%
5.9%
5.6%
5.2%
Rent
on8.
0%8.
5%8.
3%7.
1%6.
8%5.
8%5.
2%5.
5%4.
8%5.
4%6.
1%8.
0%8.
3%7.
8%6.
5%4.
8%6.
4%5.
9%5.
5%Ke
nt7.
8%7.
9%7.
1%7.
2%5.
4%5.
9%5.
0%4.
1%4.
4%4.
6%6.
3%7.
7%7.
0%6.
7%6.
7%4.
6%5.
4%5.
1%4.
6%De
s M
oine
s8.
8%8.
9%10
.8%
7.9%
7.6%
6.7%
4.9%
5.7%
5.6%
5.8%
7.7%
7.6%
7.7%
7.0%
7.7%
6.0%
5.8%
6.1%
6.1%
Fede
ral W
ay7.
2%7.
1%8.
3%8.
3%6.
8%5.
5%4.
4%5.
6%4.
9%4.
9%7.
2%8.
4%7.
8%7.
7%6.
2%6.
4%6.
4%5.
9%5.
5%Au
burn
8.7%
6.9%
8.1%
6.8%
6.3%
6.1%
5.7%
3.9%
3.5%
4.1%
5.6%
7.1%
8.5%
7.3%
5.8%
4.8%
5.3%
5.5%
5.0%
S noh
omis
h Co
unty
:9.
0%8.
5%7.
7%6.
3%5.
8%4.
7%3.
9%4.
0%4.
0%4.
8%5.
8%6.
8%6.
9%5.
7%5.
7%4.
4%5.
1%4.
6%4.
6%Ev
eret
t Cen
tral
9.6%
9.3%
6.7%
8.4%
8.6%
5.5%
3.7%
3.1%
3.5%
3.8%
6.0%
6.9%
6.7%
7.8%
7.0%
4.8%
5.0%
5.4%
4.8%
Muk
ilteo
/Pai
ne F
ield
12.2
%10
.0%
8.4%
6.1%
6.1%
5.4%
4.5%
5.3%
4.6%
5.9%
7.2%
7.7%
8.0%
8.7%
6.1%
4.7%
5.9%
5.5%
5.4%
Silv
er L
ake
8.9%
8.1%
7.7%
6.1%
6.2%
5.9%
4.2%
4.6%
4.3%
5.5%
6.4%
7.5%
7.0%
4.9%
6.6%
4.4%
5.4%
4.5%
5.3%
Lynn
woo
d8.
0%8.
2%8.
4%7.
2%4.
8%4.
4%3.
4%3.
6%3.
9%4.
8%5.
6%6.
8%7.
4%5.
3%5.
3%4.
4%4.
9%3.
5%4.
2%Ed
mon
ds8.
5%8.
3%7.
7%5.
8%4.
5%5.
2%3.
4%2.
9%2.
6%3.
0%3.
8%4.
9%7.
6%5.
4%5.
8%6.
0%5.
0%4.
3%3.
3%M
ill C
reek
6.0%
7.0%
6.2%
5.9%
5.3%
3.3%
3.7%
3.2%
3.8%
4.6%
6.0%
7.0%
6.0%
3.9%
4.7%
3.9%
4.9%
6.2%
5.0%
Mar
ysvi
lle/M
onro
e7.
9%5.
2%5.
0%3.
5%3.
7%2.
1%0.
9%2.
1%1.7
%1.5
%3.
1%4.
2%3.
5%3.
9%4.
4%2.
6%4.
0%3.
1%4.
1%M
ount
lake
Ter
race
9.2%
9.7%
10.0
%8.
7%7.
7%3.
7%4.
3%2.
5%3.
4%4.
6%6.
0%6.
4%6.
8%4.
8%5.
3%5.
3%4.
4%4.
5%3.
8%Bo
thel
l Nor
th8.
1%7.
9%6.
0%5.
1%5.
5%3.
1%4.
3%4.
5%4.
7%4.
3%4.
0%5.
6%5.
0%4.
4%4.
8%3.
4%4.
0%3.
5%2.
9%P i
erce
Cou
nty:
6.9%
8.0%
8.2%
6.5%
4.9%
4.8%
7.4%
5.9%
3.6%
3.9%
4.5%
6.0%
9.3%
7.6%
5.0%
5.6%
6.2%
5.8%
6.3%
Tota
l 3-C
ount
y A
rea:
7.6%
7.5%
7.4%
6.6%
5.3%
4.7%
4.8%
4.3%
3.8%
4.2%
4.9%
6.6%
7.2%
6.3%
5.0%
4.6%
5.0%
4.5%
4.7%
Puge
t Sou
nd O
vera
ll:7.
3%7.
3%7.
4%6.
5%5.
3%4.
6%4.
7%4.
4%3.
8%4.
1%4.
8%6.
6%7.
2%6.
3%5.
0%4.
6%5.
3%4.
7%4.
8%
Sour
ce:
Dupr
e +
Scot
t Apa
rtm
ent A
dvis
ors,
dup
resc
ott.c
om, (
206)
935
-291
5