They’re far from frozen but industry analysts claim Seattle’s rents have finally cooled. Want further proof? A Seattle developer has announced plans to pass over the lucrative rental market and take on all the risk — and, hopefully, all of the reward — of building a condominium building on Capitol Hill.
A planned six-story condominium development at 127 Bellevue E will be made up of 44 small, relatively inexpensive units you can buy, not rent.
“The plan is to provide affordable, walkable, sustainable housing in a city that has a shortage of inventory in core locations,” Ed Gallaudet, president of developer Build Urban, said.
The price of condominiums has surged alongside the costs of every housing type in the Seattle area. The average price of a condo in Seattle is $535,000, up $60,000 from May 2017, according to the Northwest Multiple Listing Service. In addition, during the same period, the median condo price has leapt 22% in King County.
The Build Urban units will start at $250,000 and could run a little less than $400,000 for upper level condos. A monthly payment for one of these condos could be roughly the same as that of an apartment’s rent.
The developers hope this project can act as a bridge to more stable home ownership in Seattle’s usually volatile real estate market.
“Our hope is that they provide a first step to home ownership for people in a very expensive city,” Gallaudet said.
CHS wrote about the property to be developed in the middle of a wave of land acquisitions across Capitol Hill as old homes were being snapped up at higher and higher prices with plans for multifamily housing.
Industry insiders have been waiting for a condo comeback on the Hill and across Seattle. In 2016, CHS wrote about expectations for the developments to return to favor and the likelihood of more conversions of existing apartment buildings into condos.
As far as conversions go, the 2008 housing market crash appears to have had a stifling effect. In 2007 1,626 Seattle apartments were converted into condos in 79 different buildings. In 2009 only 19 units were converted in two buildings.
One interesting wrinkle in the condo slowdown is covenants on many new buildings that prevent condo conversions for five years. The covenants, well-known to developers but perhaps less known to those outside real estate, mean developers can avoid a costly additional layer of inspections that goes along with new condo construction. With some of Capitol Hill’s most intense construction occurring within that time frame, it is possible some of those buildings may convert. As far as we know, the Hill hasn’t seen a conversion since 2009.
But new condo projects face a bigger financial hurdle: the Washington Condominium Act basically guarantees a developer will face litigation over each and every project. Legislation to ease the act died in Olympia this winter under opposition including Capitol Hill’s Sen. Jamie Pedersen.
This is Build Urban’s first condominium project in Capitol Hill, and appears to be the first project of its kind in a neighborhood dominated by apartments.
Since the project is still in its early stages, developers haven’t had many formal opportunities to hear the input of the public, but Gallaudet says the idea has been “well received.” Build Urban is working on a similar project in the Eastlake neighborhood and say the project was approved by the design review board. No community meetings for this building are yet on the schedule.
“It’s still got a long way to go and we hope it continues to build momentum,” Gallaudet said.
The building will include common amenity spaces, such as a rooftop deck that will feature an urban garden and a panoramic view.
Architecture firm Workshop AD will design the 19,000-square-foot building.
Depending on the development process, Build Urban expects to break ground on the project in mid-2019. It is expected to be completed by the end of 2020.
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