Puget Sound
Population: 3.46 million
Median household income: $61,762
Average monthly rent: $908
Vacancy rate: 5.2%
Unemployment rate: 9.13%
Notable: The Puget Sound region, which includes King, Pierce, and Snohomish counties, is home to more than 100 million geoducks, also known as “king clams,” a delicacy in Asian countries. The waters and bays of the estuary are home to salmon, harbor seals, sea lions, and both humpback and gray whales. The islands and both sides of the sound are interconnected by a state-run ferry system, the Washington State Ferries, which allows people and cars to move around the Puget Sound region with ease.
Sources: Washington State Office of Financial Management; Dupre + Scott; U.S. Bureau of Labor Statistics
Despite the drastically improving market, 2010 saw relatively few quality assets for sale, partly because many property owners purchased their multifamily assets during the boom years from 2005 to 2008. Even with the dramatic improvement in market conditions, the economic values of these properties remain below the pricing at which they were purchased.
Today, investor and developer interest is at its best levels since 2007. Overall volume of multifamily sales for 2010 was approximately $750 million, 45 percent of which came in the fourth quarter. By contrast, 2009 volume reached only $450 million.
Looking Forward
That doesn’t mean there aren’t some gray clouds on the horizon. For example, the downtown Bellevue market is at risk of Âoversupply.
Since 2006, the area has added more than 2,000 units across nine new projects, a significant increase to the submarket, which only has a total of approximately 13,000 units. What’s more, the city of Bellevue reports that upward of 900 prospective units could be added to the downtown market in the next few years. As a result, Dupre + Scott reports a market vacancy of 3.2 percent in Bellevue and a gross vacancy rate (which includes new units currently in initial lease-up) of a striking 11.2 percent.
Despite this potential oversupply hiccup, there are many upsides to Puget Sound. Driving area rents, vacancies, and values over the next five years are four key factors—jobs, Âdemographics, migration, and development.