As we expand our pricing coverage across the USA we have recently added the Pacific Northwest to our portfolio. Here’s a look at the 3 major markets in Washington and Oregon: Seattle, Spokane and Portland.
Washington ranks 14th among the states with about 350,000 units in almost 3300 properties. At an average age of 32 years, Washington ranks 19th among the states for newest properties.
With right at 300,000 units in 2700 properties, the clear majority of Washington properties are in the Seattle market. 233,000 of those Seattle units are in conventional properties. The Seattle market is currently performing well with an average occupancy of 93%, though new construction in the last few years has taken a slight toll on average occupancy. In 2015, average occupancy was hovering in the 95% range market-wide. Prices, though, have continued to increase. Average effective rents are now $1586 per unit and $1.85 per square foot.
Overall, we have subdivided the Seattle market in to 20 submarkets, ranging from 180 properties in the Capitol Hill/Downtown submarket to only 5 properties in the Northwestern outlying counties. Both the Downtown and Lake Union submarkets are topping out the price scales at $2.93 per square foot, but with new Class A properties, competition has pushed average occupancy under 90% in both submarkets. Several submarkets, meanwhile, are reporting average occupancy above 95%, including Lakewood, Bellingham, Tacoma and the far Eastern counties.
Like Seattle, the Spokane market has strong occupancy numbers but has seen its occupancy fall from the historic highs of a few years ago. Currently, average occupancy in the area is 94.3%, but in June of 2016 occupancy had peaked at 97.2%. We are currently tracking almost 400 properties in the greater Spokane area with about 37,000 units. Of those, 28,000 units are in 264 conventional properties with more than 50 units. Of the 10 submarkets we have demarcated in the area, the most populous in terms of conventional multifamily units is Kennewick/Richland with 7847 units. The average price per unit is right at $1.00 per square foot for the region with most of the submarkets prices in that range – apart from South North Metro, which is averaging $1.24 per square foot.
Oregon ranks near the bottom of the states in average units per property with an average of only 83 units. Only Wisconsin and Minnesota have fewer units per property and also have a major metropolitan area ranked in the top 40 for population in the United States. Like those states as well, the average age of a multifamily unit is approaching 35 years. Overall, the Portland market has almost 2200 multifamily properties with about 190,000 units. About 24,000 of those units are across the Columbia River in Washington State. 145,000 of the greater Portland units are in about 1400 conventional properties with the rest servicing Student, Senior or Income restricted tenants. The average effective rent per unit within the 18 defined submarkets is $1286 and the average per square foot is $1.46. New Class A construction in the West Portland/Business District submarket has driven average prices well above that to $2.34 per square foot. However, at 83.6%, average occupancy in the submarket is well below the 93.1% market average. Other submarkets, however, are faring much better. Yamhill, Columbia and Cowlitz (WA) counties are all experiencing occupancies in the 98-99% range.
The recurring theme in looking at these markets is that the pricing levels are at all-time highs and the occupancy numbers are at historically enviable levels. However, the high-water mark for occupancy occurred 12-24 months ago and have been slowly ebbing over the last several quarters. Absorption in these markets is still strong but is struggling to keep up with new construction. Some interior submarkets are in distinct caution territory when it comes to over-development. It will be interesting to see if the markets can put development on hold over the next 2 years or so in those submarkets and allow the newly constructed units to absorb tenants without even more units to compete with.
Alongside our brand-new website we have additional exciting announcements later in the year. For additional information on these markets or any of our services, please visit www.alndata.com or call 800-643-6416 ext. 3.