Apartment rents jumped 6.5 percent during 2013 to $1,214 a month in King and Snohomish counties, but tenants should see market rents stay level or even decline this year, a new report suggests.
After climbing 3 percent in 2013’s second quarter and 2.4 percent in the third, the average monthly rent in the Seattle metro market actually dipped in the fourth quarter by $5, according to Seattle-based Apartment Insights Washington, which tracks rents, vacancies and concessions in the Puget Sound region.
Meanwhile, the vacancy rate rose to 4.6 percent in the fourth quarter, up from 4.4 percent in the third quarter, and more properties offered fatter concessions, said Tom Cain, principal of the Seattle firm.
“It’s a clear signal of the market softening,” Cain said. Renters in 2014 will have more choices, he said, and shouldn’t expect the big hikes of recent quarters.
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The Seattle metro area is in the middle of the biggest apartment building boom in two decades. Robust job growth has pushed vacancy rates to historic lows, placing Seattle among the worst U.S. cities for recent rent increases.
The 6.5 percent growth in rent in 2013
was the highest annual increase since the last job boom. Average apartment rents jumped 8.6 percent in 2007 and 9.6 percent in 2006, Cain said.
The firm, which partners with Phoenix-based RealData, in November surveyed 1,173 apartment properties with at least 50 units in King and Snohomish counties.
Bellevue is the region’s most expensive city for a one-bedroom apartment, with rent at $1,434 a month. But downtown Seattle — including Belltown, Denny Triangle and South Lake Union — is the priciest submarket, at $1,624, according to Apartment Insights.
Beyond downtown, Seattle’s most expensive neighborhoods for a one-bedroom apartment were Fremont/Wallingford ($1,514), Capitol Hill ($1,449) and First Hill ($1,421). The lowest rent was in North Seattle ($957).
Rents in three Eastside areas fell 3 percent in the fourth quarter, even as rents in the metro market overall dipped slightly.
East Bellevue, the Eastgate area south of Interstate 90 and Bothell have the highest vacancy rates. Major employers that once leased office space along Interstate 90 have moved to downtown Bellevue, and their employees have followed, hurting apartment properties near these suburban office parks, Cain said.
Developers have about 14,140 apartment units under construction and will deliver more than 9,700 in 2014, Cain estimates. Even if job growth remains steady, he said, the swelling supply will spur more competition for tenants and slow rent hikes.
It’s already starting to happen in Seattle’s Ballard neighborhood, which saw a massive buildup of new apartments.
The submarket had the biggest increase in vacancies in the fourth quarter, nearly 2 percentage points, though the overall vacancy rate is still below 5 percent — considered a tipping point in the balance of power between tenants and landlords.
Rents in Ballard still rose, Apartment Insights reports.
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org On Twitter @sbhatt