Seattle’s booming economy is fueling new housing formation and record levels of rental housing construction. Metro area job growth outperformed the national average since 2016 with many additions in high-paying sectors, such as technology and life sciences.
In fact, CoStar calls demand growth “outsized” in the Puget Sound, a trend expected to continue, especially near downtown and Eastside employment centers. The high-paying tech sector continues to outperform other sector.: Amazon has plans to add 20,000 new workers by 2022, while Facebook and Google (combined) could add a similar number of workers during the same time period.
Here are some key metrics on the state of the Seattle rental housing market:
- Q4 2018 YOY Vacancy Rate: 5.9%
- Q4 2018 Asking Rent Growth: 2.5% to $1,637
- No. of Units Under Construction: 24,704
- No. of Units Delivered Q4 2018 YOY: 9,956
Construction of Seattle Rental Housing Units Skyrockets
Tech employees need places to live, which has sparked unprecedented demand for Seattle rental housing. Seattle has more cranes in the sky than any other in the country.
Seattle rental housing inventory increased 14% over the past three years, impressive for a city of Seattle’s size. Supply continues to flood the local market: Approximately 28,000 units, or 10% of the total inventory, was added from 2016 to 2018. Tens of thousands more units are expected over the next few years. In addition to the downtown area and Eastside submarkets, projects in outlying areas like Pierce, South King and Snohomish counties, are also rising.
Builders Focus on Amazon and Transit-Oriented Projects
Amazon is a major engine of economic growth in the region. As a result, developers are focusing on building in neighborhoods with easy access to the online retailer’s offices. For instance, Holland Partners opened the 325-unit Westlake Steps in Westlake in August 2017, just steps away from Amazon offices. The project was fully stabilized a year later.
Transit-oriented projects have also grown in popularity. In South Seattle, developers are targeting Columbia City, Othello Station and Beacon Hill. A majority of these rentals are located 20 minutes from downtown along the light rail line. As the light rail expands both east and north, transit-oriented projects will continue to rise in tandem, even though the lines aren’t expected to open until 2023 and 2024, respectively.
For more information on the state of Seattle rental housing, download our latest State of Mynd Report.