All of Capitol Hill’s incoming apartment supply may not be enough to outstrip demand:
Demand continues to outpace new supply. That’s partly due to job growth. Conway Pedersen Economics reports that our region added 49,100 jobs since the first quarter of last year. Another positive trend has been in-migration to the region. While not exactly a measure of in-migration, driver license data is a close to “real-time” substitute. So far this year, the number of people in this region who turned in out-of-state licenses is up 16% from the same period last year.
So you will have to forgive the analysts at Dupre + Scott for licking their chops. These are boom times for apartment developers:
The market vacancy rate is 3.6% in the Puget Sound region. That’s down from 4% last fall. The vacancy rate has only been this low once before since 1980. So, if this is the calm before the storm, it is an extremely good way to start.
The gross rate including “vacancies in existing properties and new properties in lease-up” is reported at 5%. On Capitol Hill, the analysts say, the rate is even chop lick-ier: 3.6%
Meanwhile, rents rose 3.3% in the region over the past six months and are 7.5% higher than they were at this time in 2013, according to the report.
The analysts also say that there is enough new construction on Capitol Hill that the “rent premium” of new buildings is beginning to skew rent trends… higher. “We’re just beginning to see the rent distortion that new construction will create in a number of neighborhoods like Ballard, West Seattle, Capitol Hill, downtown Bellevue, and others,” the Dupre + Scott report concludes. “So beware the skew of the new.”
Fortunately, the City Council will have a new affordable housing plan this summer to sort it all out. Right?