With ‘skew of the new,’ rents up, vacancies down on Capitol Hill

11th and Pine's Sunset Electric is nearly operational

11th and Pine’s Sunset Electric is nearly operational

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?

26 thoughts on “With ‘skew of the new,’ rents up, vacancies down on Capitol Hill

  1. Commence whining about “capitol hill was better ten years ago, yuppie Amazon scum, go back to bellevue, cookie cutter, where will all the baristas live, $1950 for a studio?, ect.”

      • What exactly are the costs involved in moving? If you pack yourself and hire a truck for the day, the cost would be minimal. Yes, I know you have to pay first/last months rent for your new place, but isn’t that partially offset by getting your damage deposit back from your old place? And, obviously, if you move to a lower-rent building, you will quickly make up for any moving expenses.

        Am I missing something? Or is this “costs of moving” claim just a rationalization for not moving to somewhere you can afford?

        • wow you guys must lead charmed and wealthy lives to not have to worry about being completely marginalized by doubled rents or to not have to worry about the thousands of dollars it costs to move. Not EVERYONE in this neighborhood is a DINK or a SINK, some of use are getting by on stymied wage scales and supporting families, and believe it or not you WANT diversity in your neighborhood, not to mention how disgusting it is to be dis-compassionate about people who’ve lived here for over 15 years being priced out of their homes.

        • @calhoun, yes, you are overestimating the income of low-income people. As someone living paycheck to paycheck, I actually have $5 in my savings account this month. Without ready cash, I can’t rent a van. Okay, maybe I could borrow a friend’s car. I still can’t put up the rent+deposit unless somebody lends me those dollars.

          • OK, Lisa, thanks for educating me on this issue. But is there any reason not to put the moving expenses on a credit card? With the money saved by renting a less expensive apartment, you could quickly pay off the balance.

            I am NOT advising you to move….that is obviously up to you. But does it really make sense to rent a place that takes up such a huge part of your income?

          • @calhoun, Credit is often not an option for low income folks–or when it is the interest rates etc. can make it more problematic. The flexibility to make the choices a lot of us take for granted just doesn’t exist. I have low income friends who live on the Hill to due proximity to employment. They could certainly move further out–but transportation costs might make that less feasible. I don’t think anyone wants to have to pay large portions of their income to live in specific areas–but moving is genuinely difficult if you have limited financial liquidity. It’s a complicated catch-22 for most.

          • @calhoun (below) You assume low-income individuals can qualify for credit cards. Many can’t. If they do have a credit card, first, last, deposit and moving expenses are often higher than their credit line. And most landlords don’t take credit cards. I suppose if you had sufficient credit, you could include cash advance fees in your moving expenses.

            Getting your damage deposit back from your old building should cover your damage deposit at your new building; it won’t offset first and last months’ rent. Additionally, the landlord has two weeks from your last day of tenancy to mail that check. You need to pay the new landlord before you move in.

  2. What I really want to know is – where are the affordable (but not subsidized for low income) new units that all this development is supposed to engender? I am a fan of density, getting people into the center of a city and making sure resources/transit supports that density. But it seems like all we’re getting are more and more higher end units, designed to attract wealthier tenants with (mostly) crappy/boring architecture.

    I’m not whining about CH being better 10 years ago, I really do want to see a discussion around why the development boom isn’t delivering the pros of density as expected (or at least messaged a few years ago), because I think there are people who supported the growth and are surprised/dismayed at how things are playing out.

    • Capitol Hill Housing has many affordable buildings and is always in the process of developing new ones, such as the large building going in across from the old liquor store on 12th Ave. And many of the units to be built over the light rail station will be affordable. And of course the apodments (much as I hate them). I’m sure there are other examples…not all new housing is high-end.

      • CHH is a great organization, but you need to apply and meet certain income criteria to rent their units. I’m talking about average joe people who are NOT low income. And I would not call the rents on aPodMents “affordable” – which is what I am trying to get at. I feel like density has been promoted as a way to bring rents DOWN, and they are still going up. The tiny spaces cost less in actual dollars but nowhere near what I would expect. based on the descriptions of the projects and the intent, I expected aPodments to be $500-600/month max. I see some of them are $1k a month and that is ridiculous.

        I think there is a very valid argument for density that isn’t based on rent (counteracting sprawl, encouraging transit that promotes mass transit use over single occupancy vehicles), but I’m not sure the development in Cap Hill has entirely delivered on those fronts either.

  3. I think Capitol Hill is better than it was 10 years ago. Also I got priced out of my old apartment and recently moved into a non-subsidized income restricted unit in a brand new building.

    • We all have our own opinions. In my view Capitol Hill is awful. It’s Kirkland and Belltown all wrapped into one . Ick.

  4. The city takes away any desire to build middle income apartments, I say middle because no one is building low income. All the regulation adds hundreds of thousands of dollars into building costs.

    Like requiring X amount of parking, your either going underground $$$$ or eating up potential space with car space.

    Min apartment sizes, again…if you want lower costs you need more supply.

    Height limits, same as above, West Cap Hill, Lower QA, First Hill and South Lake Union should really just be able to build whatever height someone wants to roll the dice on.

    But since people do not like small micro apartments or large buildings packed with units or new buildings with no/limited parking…why not just shoot for luxury housing that could-might-will be converted to Condos in 2-4 years.

    • You don’t like those things. I don’t own a car, so I don’t need a parking space. I’m not obsessed with having a bunch of extra useless space, so 350 square feet is fine for me. Large complexes offer more amenities and I like amenities. Of course everybody’s different. Some people like having a big house with rooms they never use, a yard that’s only walked on when it gets mowed and sitting in traffic for 15+ hours a week.

      • I don’t have a car either..that’s the point..the city requires new buildings to build X amount of parking.

        If someone wants/needs more parking, let someone build a parking lot tower, otherwise why pass costs on to non-users(ie the 25-40% of the building that might not drive).

        • Most of the buildings under construction now require far less than 1:1 ratio of apartments:parking spaces. The city IS addressing this issue. And the costs aren’t being passed on to the non-drivers. These buildings usually charge $100-200 or more/month for a parking space.

          • Why require any? If a building owner wants to knock off 20% from the price and have no parking that should be his problem(if people do not want, they will not rent/purchase).

            Land is around 350-400 a sq foot, requiring things people do not want just moves the average to upper income.

            The only way there will be more middle, lower middle income units BUILT on C.Hill is 1. High Density/higher building limits 2. tax incentive to do so 3. City builds them.

            C.Hill is a premium location, so it stands to reason things will start to skew upwards.

          • Patrick, it is not just a building owner’s problem if he/she decided to not have any parking…it is also a serious problem for nearby residents, because parking availability then becomes that much tighter. When any new building fails to provide at least some parking (such as all the apodments), it is a slap in the face to those who are already living in that area.

            It is just not realistic to think that most of the apartment residents will not own a vehicle.

  5. What I don’t understand here– this trend has continued for years. Housing getting much more expensive. All the job growth is in new/high-tech industries. It’s not a mystery. It’s been obvious for years. It will never change. You know how this story goes…..

    Yet very few people, especially young people, who *could* re-think their future and re-train for one of these better paying jobs, actually does anything about it except whine.

    • It’s not a mystery, but it’s disheartening and moves our creative core urban spaces into suburb-like environments. THAT is not mystery, yet I never see any of these new/high-tech industry types discuss their impact on a city. Gimme. Get Get Out. Gimme. That’s what it sounds like. Oh, and on the weekends? It sounds like, “WOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO”.

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  7. Again, why is it the builders problem to provide parking options? If parking truly is a problem, private solutions will pop up, there is parking on Pike/Summit for like $125 a month in a private lot. If it’s that bad the price will go up OR someone will make more parking.

    I’m not saying a building shouldn’t be able to make parking, I’m saying it should be left to them/local market to demand it, not some council decision.
    I do not have car, work downtown and live in a place with car parking..at least 50% of the stalls are unoccupied late at night on a weekday, that is dead space.

    What percent of apartments are just sitting on the market? 3-5%? If people are truly that unhappy with parking on the hill, they would vote with their cars and move and vacancy rates would rise, prices would fall or go flat and people would start building dedicated lots..but wait we aren’t seeing that happen are we?

    I’m sure soon Seattle will look at requiring everything to be LEED certified, separate parking for bikes,etc..all noble ideas that just create more upward price pressure.

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