SIMON | ANDERSON TEAM Employment & 2020 APARTMENT MARKET STUDY › wp-content › uploads › 2020...

SIMON | ANDERSON TEAM

2020 APARTMENT MARKET STUDY

Employment & Apartment Development Pipeline Analysis

Seattle & Puget Sound Region

TABLE OF CONTENTS01INTRODUCTION

Track Record .............................................................................................. 4

Our Development Land Sales Highlights .............................................. 4

Meet Our Team ......................................................................................... 5

02EMPLOYMENT & DEVELOPMENT OVERVIEW

Puget Sound Apartment Development Overview ................................ 8

Apartment Pipeline Snapshot ...............................................................10

Economic Fundamentals .......................................................................11

Future of the Office Market ....................................................................12

Strength of the Puget Sound Office Market ........................................13

Apartment Developer Survey ................................................................14

03KING COUNTY

Employment Overview ...........................................................................19

Urban King Development Overview ....................................................22

Suburban King Development Overview ..............................................38

04SNOHOMISH COUNTY


Development Overview .........................................................................50

05PIERCE COUNTY



06KITSAP COUNTY



07DATA SOURCES & DEFINITIONS .............................................................76

Turning our calendars from 2019 to 2020 not only signified the beginning of a new year, but also a new decade — and the prospect of an entirely new market cycle.

Needless to say, it didn’t start out quite like any of us imagined.

While the current health crisis is unprecedented in modern times, we can anticipate that people’s reactions and market results will likely approximate those resulting from past major economic events.

In this issue of our 2020 Market Study, we analyze employment and income data as of year-end 2019, coupled with the current apartment development pipeline and existing inventory (10+ unit buildings) across King, Snohomish, Pierce, and Kitsap counties.

WHY EMPLOYMENT & DEVELOPMENT?

Analyzing income growth, job creation, and office development is fundamental to answering whether the Puget Sound can sustain growth of an additional 100,000+ apartment units. With simple calculations of pre-leased office space and the multiplier effect of new jobs created (direct and ancillary), we’re able to conclude that our region requires an additional 47,000 new apartment units simply to maintain equilibrium with job creation and in-migration in the next few years. We explore these numbers in more depth on page 12.

WHAT CAN WE EXPECT IN A TIME OF THE UNEXPECTED?

It may feel unhelpful or pointless to look at data rooted in the pre-COVID-19 era, and while there’s no denying that seemingly everything changed over the last three months, we’d beg to disagree. In fact, the best antidote to economic turmoil as we await a vaccine is to temper concern with patience and thoughtful study of the market.

I have vast belief in Seattle as one of the most economically resilient markets in the Unites States, if not the world. Whether it was the Great Depression, Oil Embargo, Savings & Loan Crisis, Tech Bubble Bust, or Great Recession, there is a light at the end of every tunnel. And I know of precious few apartment investors who wish they waited longer to wade back into the apartment investment market after nearly every financial downturn of the last 50 years.

Accordingly, keep your eye on the next 10 years, rather than the next 10 weeks or months, and please call us to discuss how we can best support you in this time of uncertainty. We are here through any market shift to help you achieve your apartment development and investment goals through our advisory, valuation, and brokerage services.

Let Us Turn Our Expertise into Your Profit!

MAY 2020

DYLAN SIMON

Executive Vice President

01 INTRODUCTION

$1.01BTOTAL VALUE SOLD &

UNDER CONTRACT

TRACK RECORD

7,468TOTAL UNITS SOLD &

UNDER CONTRACT

MULTIFAMILY INVESTMENT SALES SPECIALISTS

The multifamily investment team led by Dylan Simon and Jerrid Anderson of Kidder Mathews represents apartment investors and developers in the sale, purchase, and financing of apartment buildings and development land ranging from $1 million to more than $100 million in value across Seattle and the Puget Sound.

Our goal is to help you maximize your multifamily investments, whether that means selling your apartment building faster and for more money, or providing advisory services for assets you plan to hold or want to buy. And while anyone can promise you results, we deliver on our promises with a data-driven understanding of the market, an extensive buyer reach, and exceptional marketing that cuts through the noise.

1.01M SFDEVELOPMENT LAND SOLD

& UNDER CONTRACT

$133.4MACTIVE LISTINGS & LISTINGS

COMING TO MARKET

OUR DEVELOPMENT LAND SALE HIGHLIGHTS

BEL-RED TODBellevue, WA

Sale Price $12,300,000

Units 249

Parcel Size 61,426 SF

4035 STONE WAY NFremont, Seattle


Units 48


2912 BEACON AVE SNorth Beacon Hill, Seattle


Units 66


MARYMOOR TODRedmond, WA

Sale Price Sale Pending

Units 135


4 KIDDER MATHEWS SIMON | ANDERSON TEAM 2020 APARTMENT MARKET STUDY

MEET OUR TEAM

Dylan is a market-leading broker serving Seattle and the Puget Sound region, specializing in the sale of apartment buildings and development land, with expertise in sales strategies, market knowledge, and industry trends.

Dylan SimonExecutive Vice President

Jerrid is an apartment broker specializing in micro apartment, urban apartment, and development land sales. He is passionate about marketing and video content.

Jerrid AndersonExecutive Vice President

Matt is an apartment broker specializing in 5-30 unit urban and suburban apartment sales, underwriting, valuations, and market research.

Matt LairdSenior Associate

Brandon is an apartment broker specializing in business development, market research, and off-market acquisitions, with an expertise in the Pierce County market.

Brandon LawlerAssociate

Winslow is an apartment broker specializing in sales of apartment buildings and development land across the Puget Sound, with expertise in the Snohomish County market.

Winslow LeeAssociate

Alex leads mortgage brokerage for the team, specializing in loan origination and financial underwriting.

Alex MundyDebt Finance

Tyler specializes in financial underwriting, apartment and development land valuations, market research, and data analysis.

Tyler BlaikieFinancial Analyst

Cate manages both team and property marketing, specializing in writing, branding, digital strategy, PR, and event planning.

Cate ChaseSenior Marketing Specialist

Michelle oversees all team processes, ensuring optimal efficiency and value creation with a strategic lens for listing activities.

Michelle YehVice President

I N T R O D U C T I O N

2020 APARTMENT MARKET STUDY SIMON | ANDERSON TEAM KIDDER MATHEWS 5

72020 APARTMENT MARKET STUDY SIMON | ANDERSON TEAM KIDDER MATHEWS

02EMPLOYMENT &

DEVELOPMENT OVERVIEW

PUGET SOUND APARTMENT DEVELOPMENT OVERVIEW

APARTMENT PIPELINE SNAPSHOT

ECONOMIC FUNDAMENTALS

FUTURE OF THE OFFICE MARKET

STRENGTH OF THE PUGET SOUND OFFICE MARKET

APARTMENT DEVELOPER SURVEY

For this study, we traced apartment development deliveries back 10 years and analyzed three distinct phases of the current development pipeline, as outlined below. Our research and data cover the quad-county region (King, Snohomish, Pierce, and Kitsap counties), encompassing more than 6,400 square miles, 100,000+ planned apartment units, and nearly 1,000 individual apartment developments.

PIPELINE DEFINITIONS

UNDER CONSTRUCTION Developments labeled “Under Construction” have broken ground. Anticipated delivery is within the next 36 months for Type I projects or the next 24 months for Type III and Type V projects.

PLAN APPROVED These units have entitlements from their respective cities and could break ground at any time. Given current market dynamics, it is important to note projects that might be on hold. Concerns over the economy, rising construction costs, and tighter lending restrictions have led some developers to rethink permitted projects. Some permitted sites will trade hands and construction will commence, while many others will be held by developers until a later date.

IN REVIEW Projects “In Review” are currently pending city approvals. In Seattle, the entitlement process can take over two years, so in many cases, projects in this category are three or more years away from delivery.

PUGET SOUND APARTMENT DEVELOPMENT OVERVIEW

EMPLOYMENT & DEVELOPMENT OVERVIEW

10+ UNIT BUILDINGS

EXISTING INVENTORY

118,178UNITS

14%

2%

41%

EXISTING INVENTORY

40,520UNITS

5%9%

EXISTING INVENTORY

108,765UNITS

6%

13%

0.5%

EXISTING INVENTORY

59,358UNITS

1%2%

4%

EXISTING INVENTORY

9,510UNITS

19%

4%5%

SNOHOMISH

SUBURBAN KING

PIERCE

URBAN KINGKITSAP

Units under construction as a percentage of existing inventory

Units approved as a percentage of existing inventory

Units in review as a percentage of existing inventory



Total Units Delivered + Pipeline2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Construction Approved In Review

Urban King 1,916 769 2,637 4,692 6,959 6,991 5,884 6,625 6,957 5,460 1,652 16,392 2,439 48,426 117,799

Suburban King 1,721 772 823 688 2,081 2,255 2,635 2,237 3,453 3,082 546 6,769 533 14,545 42,140

Snohomish 591 108 352 619 924 1,213 60 441 48 1,073 - 2,186 - 3,495 11,110

Pierce 353 357 966 732 601 848 833 979 313 1,213 126 1,250 675 2,264 11,510

Kitsap - - - - 251 12 71 245 166 114 38 417 484 1,816 3,614

Subtotal 4,581 2,006 4,778 6,731 10,816 11,319 9,483 10,527 10,937 10,942 2,362 27,014 4,131 70,546

Total Delivered 84,482 Total Pipeline 101,691 186,173

PUGET SOUND DELIVERIES VERSUS INVENTORY*

2013 2014 2015 2016 2017 2018 2019 Q1 2020

Total Deliveries (Units) 6,731 10,816 11,319 9,483 10,527 10,937 10,942 2,362

Total Inventory (Units) 269,945 280,761 292,080 301,563 312,090 323,027 333,969 336,331

*KING, SNOHOMISH, PIERCE & KITSAP COUNTIES — 10+ UNIT BUILDINGS

DEVELOPMENT DELIVERIES & PIPELINE BY YEAR / STATUS

E M P L O Y M E N T & D E V E L O P M E N T O V E R V I E W

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000


Inventory as of Year-End 2009

Inventory Growth 2010 – 1Q20

Under Construction

Plan Approved

In Review

Urban King 67,636 Units 50,542 Units 16,392 Units 2,439 Units 48,426 Units

Suburban King 88,472 Units 20,293 Units 6,769 Units 533 Units 14,545 Units

Snohomish 35,091 Units 5,429 Units 2,186 Units 0 Units 3,495 Units

Pierce 52,037 Units 7,321 Units 1,250 Units 675 Units 2,264 Units

Kitsap 8,613 Units 897 Units 417 Units 484 Units 1,816 Units

A MONUMENTAL DECADE

Over the course of the last decade, apartment developers delivered more than 84,000 apartment units across the region. The previous apartment building boom spanned from the mid-1980s to the early 1990s and also contributed over 80,000 apartments to the region. The key difference is an undeniable shift towards urbanization during this market cycle, in which Urban King County was well on the way to doubling its total unit count in a 10-year period.

APARTMENT PIPELINE SNAPSHOT

Development History & Pipeline by Region

23%

75%

15%

14%

10%

14%

6%

5%

2%

4%

1.8%

0.5%

35%

13%

8%

17%

4%1.1%

4.9%

URBANIZATION STILL PREVAILS

In the last several years, more apartment developers looked for opportunities outside the core, urban neighborhoods of Seattle and Bellevue, discovering traditionally suburban locations supportive of urbanization to plan and deliver new apartment communities. The great majority of these developments are located in King County, yet Snohomish, Pierce, and Kitsap counties continue to offer developers some attractive alternative locations — especially where urban dynamics exist and/or public transportation options can be capitalized.

PREPARE FOR A SLOWDOWN

Even prior to COVID-19, the number of apartment buildings under construction or with approved permits began to slow. Municipalities were inundated with permit applications over the last several years, public processes are taking longer, and rising construction costs slowed starts, all contributing to a declining number of deliveries in years ahead.

Given that permitting offices are working remotely and there is concern over near-term market fundamentals, we expect a slowdown in the number of apartment deliveries once buildings currently under construction are completed. We believe this is healthy for the market, providing time to absorb new inventory and prepare for a vibrant rebound ahead of us.


ECONOMIC FUNDAMENTALSINCOME GROWTH THAT LEADS THE NATION

As of the writing of this study, the world is at grips, battling the near-term impacts of COVID-19. It is far too early to quantify either short-term or long-term impacts on the Puget Sound economy, let alone that of the United States and the globe. Yet, the year-over-year data from 2018–2019 overwhelmingly supports a conclusion that the Puget Sound’s economy was growing at a

rate nearly double that of the nation in all key metrics, especially personal income growth (110% greater in Puget Sound!).

We will continue to follow the changing economic conditions through 2020 and into 2021; however, our early prognostication is that the backbone of the region’s economy is diversified, resilient, and well-prepared for an early recovery. Much like the region roared back from the Great Recession, we expect a similar revival this go-round.

Median Household Income: Puget Sound vs. the Nation

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

PUGET SOUND

THE NATION

Unemployment Rate 3.3% 3.5%

Employment Growth 2.5% 1.4%

Population Growth 1.7% 0.5%

Personal Income Growth

6.3% 3.0%

$90K

$70K

$50K

$30K

$22,595

$13,903PUGET SOUND

THE NATION

{{

YEAR-OVER-YEAR % INCREASE CALCULATED FROM 2018 - 2019



Our Metrics

A commonplace metric for headcount provides for 150 square feet of space per employee, equating to pre-leased Class A office space for approximately 45,000 employees over the next two years. Given that each employee generates demand for more ancillary jobs and services, we apply a “multiplier effect” of 4 to 1, which equates to 190,000 additional jobs. In total, we estimate 235,000 new jobs will be created in the region based on preleasing rates for 2020 and 2021.

It is too soon to tell what the impact of COVID-19 will be on office leasing and occupancy dynamics. While a larger percentage of employees may work from home part-time, those in the office will likely require more personal space, expanding demand.

MASSIVE ABSORPTION OF OFFICE SPACE DEMONSTRATES CONTINUED APARTMENT DEMAND

Tech continued to expand in the Pacific Northwest throughout 2019 and into Q1 2020, absorbing 3.5 million square feet of office space. Amazon, Facebook, Expedia, and Google are among the most actively growing companies in the area.

With an additional ten million square feet of office space currently under construction across the region, there are some worries of oversupply. Yest, outsized demand on the Eastside led to an impressive preleasing figure of 97%, whereas 67% of space is currently preleased in Seattle.

This high demand met with limited supply tipped the scales, and Bellevue now leads the region in price per square foot for Class A office space.

FUTURE OF THE OFFICE MARKET

JOBS CREATED MULTIPLIER EFFECT JOBS ADDED

Seattle Office Absorption & Job Creation

2018 2019 Under Construction

81,109POSSIBLE JOBS

Square Feet

{7M

6M

5M

4M

3M

2M

1M

0

Jobs Added

180K

160K

140K

120K

100K

80K

60K

40K

20K

0

117,047POSSIBLE JOBS


{{

2018 2019 Under Construction

Square Feet

4.0M

3.5M

3.0M

2.5M

2.0M

1.5M

1.0M

500K

0

Jobs Added

100K

80K

60K

40K

20K

0

17,627POSSIBLE JOBS

23,245POSSIBLE JOBS


Eastside Office Absorption & Job Creation

{ {

{

OFFICE ABSORPTION (SF) OFFICE UNDER CONSTRUCTION (SF) OFFICE PRE-LEASED (SF)




STRENGTH OF THE PUGET SOUND OFFICE MARKET

EASTSIDE OFFICE RATES SURGE PAST SEATTLE

Just last year, Class A office rental rates in Bellevue trailed those in Seattle by approximately 10%. Today, Bellevue holds the title with rates surging 10% above Seattle’s. Overall, office rental rates in Seattle continued to grow just slightly year-over-year (2%), while Bellevue posted a 27% gain.

Although Class A office rental rates continue to grow, the Puget Sound office market still provides tenants a significant discount compared to other popular tech-driven markets, such as San Francisco and New York City. The region’s growing supply of tech talent, discounted office rates, and lack of state income tax will help keep the office market strong through the rocky start to 2020 and beyond.

$56.61

PRICE/SFEASTSIDE CLASS A OFFICE RENT

27%

Y-O-Y INCREASEEASTSIDE CLASS A OFFICE RENT

Class A Office Rent

$0

$20

$40

$60

$80

$100

$56.61$51.44

$91.70 $89.08

Eastside Seattle Manhattan San Francisco

Regional Office Absorption & Vacancy Rates

NEW DELIVERIES (SF) NET ABSORPTION (SF) VACANCY (%)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Square Feet

5M

4M

3M

2M

1M

0

-1M

-2M

-3M

16%

15%

14%

13%

12%

11%

10%

9%

8%

7%

6%

Vacancy



WHAT THE REGION'S ACTIVE APARTMENT DEVELOPERS HAVE TO SAY

In April 2020, we reached out to apartment developers across the region to get real-time feedback on how market dynamics may have shifted from the start of 2020 through the first quarter.

The survey results offer a glimpse into abruptly changed market conditions brought about by the COVID-19 pandemic, and their direct impacts on regional apartment development.

APARTMENT DEVELOPER SURVEY

1 2-3 4-5 More than 50%

10%

20%

30%

40%

50%

60%

70%

Less than 100 100 - 500 500 - 1,000 More than 1,0000%

10%

20%

30%

40%

50%

60%

70%

Under 5.50% 5.50% - 5.75% 5.75% - 6.00% Above 6.00%0%

10%

20%

30%

40%

50%

60%

70%

Under 5.50% 5.50% - 5.75% 5.75% - 6.00% Above 6.00%0%

10%

20%

30%

40%

50%

60%

70%

How many apartment developments are you currently working on (in permitting and/or under construction)?

How many apartment units do you currently have in permitting or under construction?

At the start of 2020, what was your average target return level for your development(s)?

As of April 2020, what is your average target return level to move forward with your development(s)?


Not at all Yes, by 1 - 25basis points

Yes, by 25 -50 basispoints

Yes, by morethan 50 basis

points

0%

10%

20%

30%

40%

50%

60%

70%

Continued withdue diligence

and plan to waivefeasibility

Continued withdue diligence

and waivedfeasibility

Continued withfeasibility, butextended thewaiver date

Terminated thecontract

0%

10%

20%

30%

40%

50%

60%

70%

No - keptconstruction

loan rates thesame

Yes - loweredconstructionloan rates by

less than .50%

Yes - raisedconstruction

loan rates 0.50%- 1.00%

Yes - raisedconstructionloan rates by

more than1.00%

0%

10%

20%

30%

40%

50%

60%

70%

No - kept equityrequirements the

same

Yes - reducedloan amounts by

less than 5%

Yes - reducedloan amounts by

5% - 10%

Yes - reducedloan amounts bymore than 10%

0%

10%

20%

30%

40%

50%

60%

70%

No, not at all Yes, by 1 - 90days

Yes, by 90 -180 days

Yes, by morethan 180 days

0%

10%

20%

30%

40%

50%

60%

70%

No, not at all Yes, by 1 - 90days

Yes, by 90 -180 days

Yes, by morethan 180 days

0%

10%

20%

30%

40%

50%

60%

70%

As of April 2020, have you changed what you predict will be stabilized capitalization rates at project completion?

For any development land acquisitions you had under contract as of March 2020, have you:

Between March and April 2020, have you experienced lenders changing rates on new loans?

Between March and April 2020, have you experienced lenders reducing loan-to-cost requirements?

Based on slowdowns within permitting offices beginning in March 2020, do you expect your permits to be delayed?

Based on slowdowns at construction sites beginning in March 2020, do you expect your date of completion to be delayed?




03KING

COUNTYEMPLOYMENT OVERVIEW

URBAN KING DEVELOPMENT OVERVIEW

SUBURBAN KING DEVELOPMENT OVERVIEW

ROBUST DEVELOPMENT PIPELINE EXPANDS BEYOND THE CORE

After nearly doubling apartment inventory over the last decade, interest among developers in Urban King isn’t waning, but is certainly shifting. Investors are focused on locations with new potential due to upzoning and existing or planned light rail stations. In well-developed areas that remain in high demand, such as Ballard, development trends are also shifting from traditional unit mixes to an efficiency focus. Microhousing comprises nearly 10% of Urban King’s current development pipeline, representing 5,000+ new units that are both affordable for residents and offer developers the highest rent per square foot of all unit types.

EASTSIDE STORY

Over the last decade, Eastside markets took a backseat to the star that is Seattle — until now. Mirroring the success of pre-leasing among office developments and growing Class A office rents, West Bellevue’s apartment pipeline now boasts the largest single development of all Urban King and a pipeline that equates to 63% of total inventory. And while Microsoft remains a consistent anchor for Eastside employment, a business-friendly atmosphere and expanding light rail line continue to draw the likes of Facebook, Amazon, and other big tech companies. Expect that East King’s pipeline of 3,300 units under construction will experience strong absorption during lease-up.

KING COUNTY

226,943TOTAL INVENTORY

89,104TOTAL PIPELINE


EMPLOYMENT OVERVIEW

A SECOND ACT, HALTED

The King County economy roared into 2019, with job growth outpacing that of both 2017 and 2018. Economists were rightly skeptical of continued regional economic growth based on a flat-to-downward trend in the previous several years signaling that the expansion cycle dating back to 2012 may soon come to an end.

Yet, employers seemingly were just waiting on the delivery of new office towers so they could fill them with employees waiting at the doors. As a result, in 2019 King County unemployment reached the lowest levels ever recorded, while personal income growth accelerated past the already brisk pace established in 2018 (5.6%), to a rate in 2019 nearly double that of the nation (5.9%).

Given the acceleration of these same underlying economic fundamentals during the latter half of 2019, no one predicted the abatement of growth in 2020, much less the binary, light-switch “shutdown” of all economies globally. A halting of growth is putting it mildly, and only time will indicate what to expect in 2020–2021. Our bet is that these economic fundamentals may lie dormant for a brief period, but they are far from extinguished. Expect King County to lead the nation, and the world, in a recovery from the impacts of COVID-19.

KING COUNTY

THE NATION





5.9% 3.0%

Total Employment1.3M

1.2M

1.1M

1M

900K

800K

700K

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19


NO. OF PERSONS EMPLOYED


K I N G C O U N T Y

Top Employers | Open Job Postings by Year

SOURCES: EMPLOYMENT SECURITY DEPARTMENT/LMEA; THE CONFERENCE BOARD, HELP WANTED ONLINE JOB ANNOUNCEMENTS

2019 JOB POSTINGS

The Boeing Company

Nordstrom

King County

Providence Health & Services

Kaiser Permanente

Fred Hutchinson Cancer Research Center

Swedish Health Service

Microsoft Corporation

University of Washington

Amazon

2018 JOB POSTINGS

T-Mobile

Amazon Web Services

Seattle Children's Hospital

Kaiser Permanente

PeaceHealth

Microsoft Corporation


University of Washington

Amazon.com Services

Amazon

0 2,000 4,000 6,000 8,000 10,000 12,000

0 2,000 4,000 6,000 8,000 10,000

EMPLOYERS LEADING THE WAY

It isn’t surprising to see the technology and biosciences industries again topping the 2019 most active employer list for King County. What is surprising is the significantly lower number of job postings compared to 2018: the top 10 employers posted approximately 4,300 fewer jobs. Given that 2019 still experienced an overall increase in employment, the reduced number of postings could be due to a stronger rate of hiring year-over-year as these companies filled critical roles.


K I N G C O U N T Y


INCOME & INDUSTRY

From 2010 to 2018, median household income in King County increased nearly $29,000 (43%). During this period, King County’s rate of income growth more than doubled that of the national average. It’s no surprise that the region’s economic expansion post the Great Recession is the envy of the nation!

Median income in King County approaching $100,000 per year is an impressive feat, as it captures growth beyond just the much-lauded technology sector. For the region, the rising tide of employment and income growth lifted all boats; although, it is clear from the data that growth in the technology, information systems, and professional sectors remained strongest.

Median Household Income: King County vs. the Nation

SOURCE: FRED

{{

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$100K

$90K

$80K

$70K

$60K

$50K

$40K

$30K

$28,675

$13,903

KING COUNTY

THE NATION

County Employment Composition by Industry

19.0%TRADE, TRANSPORTATION, & UTILITIES

13.0%HEALTHCARE & EDUCATION

10.0%LEISURE &HOSPITALITY

12.0%GOVERNMENT

6.0%CONSTRUCTION

5.0%FINANCIAL ACTIVITIES

3.0%AEROSPACE

8.0%INFORMATION

10.0%OTHER MANUFACTURING

9.0%TECH & SCIENCE 5.0%

OTHER

SOURCE: EMPLOYMENT SECURITY DEPARTMENT

Total Employment Y-O-Y INCREASE Y-O-Y DECREASE NO CHANGE Y-O-Y

K I N G C O U N T Y


URBAN KING DEVELOPMENT OVERVIEWLast year marked the end of a decade and a remarkable market cycle of apartment inventory growth in Urban King. The horizon of development in these neighborhoods is no less impressive, with a pipeline of apartment projects capable of matching — and even slightly surpassing — the number of units added over the last 10 years.

While year-over-year the number of projects under construction remains nearly unchanged, far fewer projects are permitted and ready to break ground, indicating that the pipeline of deliveries is set to slow in the next two years.

The locations and composition of apartment projects planned in Urban King continue to metamorphosize. Neighborhoods east of Lake Washington are experiencing more development activity, and across all markets unit sizes are progressively shrinking.

Ballard

Fremont

Wallingford

Green Lake Roosevelt

University District

Magnolia

Queen Anne Capitol

Hill

Central District

WestSeattle

SouthSeattle

MercerIsland

West Bellevue

Kirkland

South Lake UnionEastlake, Westlake

First Hill, Yesler Terrace

Belltown, Downtown, Pioneer Square,

NORTH KING

EAST KING

SOUTH KING

Urban King Development Pipeline

TOTAL INVENTORY: 118,178 UNITS

UNDER CONSTRUCTION: 16,392 UNITS | 14% OF TOTAL INVENTORY

PLANS APPROVED: 2,439 UNITS | 2% OF TOTAL INVENTORY

IN REVIEW: 48,426 UNITS | 41% OF TOTAL INVENTORY

K I N G C O U N T Y


INVENTORY AS OF YEAR-END 2009 INVENTORY GROWTH: 2010 - 1Q2020 UNDER CONSTRUCTION

Ballard 2,191 Units 3,471 Units 248 Units

Fremont, Green Lake & Wallingford

4,156 Units 2,635 Units 181 Units

University District & Roosevelt


Queen Anne & Magnolia 7,203 Units 3,147 Units 702 Units

South Lake Union, Westlake & Eastlake

4,146 Units 7,802 Units 1,781 Units

Belltown, Downtown & Pioneer Square

7,437 Units 7,974 Units 3,873 Units

First Hill & Yesler Terrace 3,923 Units 2,951 Units 2,023 Units

Capitol Hill 11,099 Units 6,358 Units 1,084 Units

Central District 1,873 Units 961 Units 1,164 Units

West Seattle 4,403 Units 3,471 Units 249 Units

South Seattle 2,428 Units 2,311 Units 1,287 Units

West Bellevue & Mercer Island


Kirkland 6,038 Units 1,646 Units 1,989 Units

NOTE: PIPELINE ONLY INCLUDES # OF UNITS CURRENTLY UNDER CONSTRUCTION. PROJECTS THAT ARE “APPROVED” OR “IN REVIEW” ARE NOT INCLUDED IN THIS CHART. SOURCE (INVENTORY AS OF 2010, INVENTORY GROWTH 2010 – 1Q2020): COSTAR

Urban King Historical Deliveries & Construction Pipeline by Neighborhood

3%

4% INCREASE OVER 1Q2020 INVENTORY

9%

7%

15%

25%

29%

6%

41%

3%

27%

8%

26%

158% INCREASE OVER 2010 INVENTORY

63%

58%

44%

188%

107%

75%

57%

51%

79%

95%

65%

27%

K I N G C O U N T Y


Leary Ave NW

8th

Ave

NW

24th

Ave

NW

NW 54th St

Seav

iew

Ave

NW

NW 39th St

Leary Way N

W

NW Leary Way

NW

Market St

NW 80th St

NW 65th St

Loyal Way NW

28th

Ave

NW

NW Market St

32nd

Ave

NW

NW 85th St

Gol

den

Gar

dens

Dr N

W

NW 61st St

Seaview Pl N

W

NW Ballard Way

Shilshole Ave NW

NW 47th St

Bak

er A

ve N

W

NW 41st St

NW 42nd St

NW 54th St

NW 51st St

Mar

y A

ve N

W

Barnes Ave NW

12th

Ave

NW

26th

Ave

NW

NW Sloop Pl

21st

Ave

NW

NW 73rd St

NW 70th St

33rd

Pl N

W

NW 68th St

NW 65th Court

NW 62nd St

NW 59th St

NW 61st St

NW 56th St

Ballard

Ballard remains a sweetheart market for apartment developers to take advantage of extremely strong renter demand.

QUEEN ANNEMAGNOLIA

SEE PAGE 27

PUGET SOUND

118

20

171

78

Microhousing Pipeline

921

16% of inventory

EXISTING APARTMENT INVENTORY: 5,662 UNITS

Construction Approved In Review Total Pipeline

248 230 1,839 2,317

4% 4% 32% 41% of inventory

Ballard’s livability and highly desirable attributes spurred the development of a large supply of new, market-rate apartment units over the last several years, further pushing rental rates. The need now for more affordable apartments paves the way for microhousing developments. Ballard has the largest pipeline of microhousing at 921 units, overtaking last year’s leader, the University District. Expect this trend to continue as larger development sites become harder to find and developers seek to maximize unit count (and rental rates) on smaller parcels.

*DEFINITIONS FOR “MICROHOUSING” & “MIXED” DEVELOPMENTS AVAILABLE ON PAGE 76

FREMONTGREEN LAKE

WALLINGFORDSEE PAGE 25

15th Ave C

orrid

or

52

59

54

163

151

72

50

22

22

5527 21

50

28

77170

134

90

6448

181102

106

8151

MICROHOUSING*

MIXED*

APARTMENT

K I N G C O U N T Y

Fremont, Green Lake & Wallingford

This trifecta of north-of-the-cut, idyllic urban neighborhoods draws strong attention from renters and apartment developers.

Although development sites are hard to come by in these very residential-focused (and zoned) neighborhoods, apartment developers continue to find opportunities. Phinney Ridge has a pipeline of nearly 500 units, and the Stone Way corridor continues its run as a hot spot for new development. With nearly 1,000 units in various stages of development, including five projects comprising over 100 units each, Stone Way has become its own micro-market. Expect these neighborhoods to remain in high demand among both developers and renters seeking the live-work-play dynamics of this market.


708

10% of inventory



181 156 2,564 2,901


GREEN LAKE

BALLARDSEE PAGE 24

UNIVERSITY DISTRICT & ROOSEVELT

SEE PAGE 26

99

26

PHINNEY RIDGE

FREMONT

WALLINGFORDStone W

ay Co

rrido

r

GREEN LAKE

54

42

45

88

49

19

27 202

40

77

120

32

2535

12

10

158 21

8841

116

66 78

48

5014

123

236

19140

10429

87

118

96

42

4018

80

66

120


MICROHOUSING*

MIXED*

APARTMENT

QUEEN ANNEMAGNOLIA

SEE PAGE 272020 APARTMENT MARKET STUDY SIMON | ANDERSON TEAM KIDDER MATHEWS 25

K I N G C O U N T Y


55th Ave N

E

Sand

Po

int W

ay N

E

25th Ave N

E

35th

Ave

NE

Union Bay Pl N

E

Prin

ceto

n A

ve N

E

NE Princeton Way

NE Blakeley St

Ravenna Pl NE

NE 55th St

NE 70th St

8th

Ave

NE

12th

Ave

NE

Roo

seve

lt W

ay N

E

NE Pacific St

NE 45th St

NE 65th St

NE 75th St

NE 65th St

NE 74th St

NE 45th St

Cowen Pl N

E

20th Ave N

E

NE 50th St

NE 47th St

NE 43rd St

NE 73rd St

NE 70th St

Pend

Ore

ille

Rd N

E

NE Campus Pkwy

7th

Ave

NE

Bro

okl

yn A

ve N

E

NE 41st St

43rd

Ave

NE

64th Ave N

E

NE Keswick Dr

NE Park Pl

NE 65th St

Oberlin Ave NE

56th Ave N

E

52nd A

ve NE

E Laurel Dr N

E

47th

Ave

NE

44th Pl NE

43rd A

ve NE

31st Ave N

E

30th

Ave

NE

Terrace Dr NE

39th

Ave

NE

34th

Ave

NE

Fran

klin

Pl N

E

37th Ave N

E

40th Ave N

E

NE 38th St

26th

Ave

NE

NE Naomi Pl

NE 49th St

Ravenna Ave N

E

22nd

Ave

NE

17th

Ave

NE

NE 67th St

NE 70th St

NE 73rd St

7th

Ave

NE

NE 60th St

NE 47th St

NE 41st St

NE 55th St

NE 64th St

NE 43rd St

55th Ave N

E

Sand

Po

int W

ay N

E

25th Ave N

E

35th

Ave

NE

Union Bay Pl N

E

Prin

ceto

n A

ve N

E

NE Princeton Way

NE Blakeley St

Ravenna Pl NE

NE 55th St

NE 70th St

8th

Ave

NE

12th

Ave

NE

Roo

seve

lt W

ay N

E

NE Pacific St

NE 45th St

NE 65th St

NE 75th St

NE 65th St

NE 74th St

NE 45th St

Cowen Pl N

E

20th Ave N

E

NE 50th St

NE 47th St

NE 43rd St

NE 73rd St

NE 70th St

Pend

Ore

ille

Rd N

E

NE Campus Pkwy

7th

Ave

NE

Bro

okl

yn A

ve N

E

NE 41st St

43rd

Ave

NE

64th Ave N

E

NE Keswick Dr

NE Park Pl

NE 65th St

Oberlin Ave NE

56th Ave N

E

52nd A

ve NE

E Laurel Dr N

E

47th

Ave

NE

44th Pl NE

43rd A

ve NE

31st Ave N

E

30th

Ave

NE

Terrace Dr NE

39th

Ave

NE

34th

Ave

NE

Fran

klin

Pl N

E

37th Ave N

E

40th Ave N

E

NE 38th St

26th

Ave

NE

NE Naomi Pl

NE 49th St

Ravenna Ave N

E

22nd

Ave

NE

17th

Ave

NE

NE 67th St

NE 70th St

NE 73rd St

7th

Ave

NE

NE 60th St

NE 47th St

NE 41st St

NE 55th St

NE 64th St

NE 43rd St

University District & Roosevelt

Fueled by an upzone, light rail expansion, and intrinsic demand, the University District is a rising star in Urban Seattle.


826

8% of inventory



914 183 5,734 6,831


U District StationOpens 2021

Roosevelt Station

Opens 2021

ROOSEVELTROOSEVELT

56

20

66230

30

32

236

244

54

129

54

91

102

79 33

126

77

165

35

131

52

26

138

4027

10

50

98

276182

26533 54

75

43

79

42 33

200

48 2040

20

235

383224

360168

344101

211

240

18847

49

27

40 31

57

64

89

59

73

T h e U n i v e r s i t y D i s t r i c t ’s development boom continues its impressive streak. We are starting to see more growth north of NE 50th Street along University Way (“The Ave”), historically a sleepy corridor for development.

The University Village area is experiencing a development boom of its own, with more than 1,300 units on the horizon. Much of this increased activity involves developers repositioning older low-rise properties.

Roosevel t i s exper iencing monumental change as well, with numerous development sites sprouting around the light rail station set to open in 2021.

MICROHOUSING*

MIXED*

APARTMENT


See Roosevelt inset to the right of this map

K I N G C O U N T Y


55th Ave N

E

Sand

Po

int W

ay N

E

25th Ave N

E

35th

Ave

NE

Union Bay Pl N

E

Prin

ceto

n A

ve N

E

NE Princeton Way

NE Blakeley St

Ravenna Pl NE

NE 55th St

NE 70th St

8th

Ave

NE

12th

Ave

NE

Roo

seve

lt W

ay N

E

NE Pacific St

NE 45th St

NE 65th St

NE 75th St

NE 65th St

NE 74th St

NE 45th St

Cowen Pl N

E

20th Ave N

E

NE 50th St

NE 47th St

NE 43rd St

NE 73rd St

NE 70th St

Pend

Ore

ille

Rd N

E

NE Campus Pkwy

7th

Ave

NE

Bro

okl

yn A

ve N

E

NE 41st St

43rd

Ave

NE

64th Ave N

E

NE Keswick Dr

NE Park Pl

NE 65th St

Oberlin Ave NE

56th Ave N

E

52nd A

ve NE

E Laurel Dr N

E

47th

Ave

NE

44th Pl NE

43rd A

ve NE

31st Ave N

E

30th

Ave

NE

Terrace Dr NE

39th

Ave

NE

34th

Ave

NE

Fran

klin

Pl N

E

37th Ave N

E

40th Ave N

E

NE 38th St

26th

Ave

NE

NE Naomi Pl

NE 49th St

Ravenna Ave N

E

22nd

Ave

NE

17th

Ave

NE

NE 67th St

NE 70th St

NE 73rd St

7th

Ave

NE

NE 60th St

NE 47th St

NE 41st St

NE 55th St

NE 64th St

NE 43rd St

W Emerson Pl

W Emerson St

Gilm

an Ave W

W Dravus St

Raye St

5th

Ave

N

Mercer St

Magnolia Bridge

14th Ave W

Que

en A

nne

Ave

NW Mercer Pl

W Galer St

Smith St

1st Ave N

W Florentia St

5th Ave W

7th

Ave

W

W Bertona St

Boston St

Gilm

an Dr W

W Tilden St

W Dravus St 9th Ave W

34th

Ave

W

W Emerson St

Wm

ont W

ay W

W V

iew

mon

t Way

W

Clise Pl W

8th Ave W

W Howe St

Tayl

or A

ve N

Roy St2n

d Av

e N

Olympic W

ay W

W Olympic Pl

W Blaine St

W Galer St6t

h Av

e W

Thor

ndyk

e Av

e W

28th

Ave

W

Mag

nolia

Blv

d W

W Republican St

W Harrison St

Queen Anne & Magnolia

This market cycle, Queen Anne and Magnolia had the smallest percentage of apartment supply growth across all Seattle neighborhoods.

Lower Queen Anne and Interbay are the only densely zoned areas in this market, limiting apartment supply growth to 6% in 2019 and Q1 2020 (for comparison, First Hill was slated for 41% supply growth based on construction activity in 2019 alone).

Queen Anne and Magnolia benefit from a limited supply of new apartment development, likely a cause for its historically low vacancy rates, even through the last downturn.


200

2% of inventory



702 102 2,157 2,961


PUGET SOUND

FREMONTGREEN LAKE


MAGNOLIA

QUEEN ANNE

INTERBAY

99

39

63

93

25

73

30

93

36

286

138

16744

50

64

42

32443

24

125

46

71

66

143

65 101

58 97

127

100

160 168


MICROHOUSING*

MIXED*

APARTMENT

K I N G C O U N T Y


Delmar Dr E

Har

vard

Ave

EValley St

9th

Ave

N

Harrison St

5th

Ave

N

Dex

ter A

ve N

Westlake A

ve N

Fairv

iew A

ve N

E Denny Way

Elak

e A

ve E

Fuhrman Ave E

E Roanoke St

Mercer St

John St

Dexter W

ay N

John St Bo

ren

Ave

N

Harrison St

Yale Pl E

Min

or A

ve E

Yale

Ave

E

Min

or A

ve N

8th Ave N

South Lake Union, Eastlake & Westlake

The market-leading pipeline of new development in South Lake Union is beginning to taper.


386

3% of inventory



1,781 388 5,194 7,363


Delmar Dr E

Har

vard

Ave

E

Valley St

9th

Ave

N

Harrison St

5th

Ave

N

Dex

ter A

ve N

Westlake A

ve N

Fairv

iew A

ve N

E Denny Way

Elak

e A

ve E

Fuhrman Ave E

E Roanoke St

Mercer St

John St

Dexter W

ay N

John St Bo

ren

Ave

N

Harrison St

Yale Pl E

Min

or A

ve E

Yale

Ave

E

Min

or A

ve N

8th Ave N

SOUTH LAKE UNIONSOUTH LAKE UNION

LAKE UNION

FREMONTGREEN LAKE


CAPITOL HILL

SEE PAGE 31 BELLTOWN, DOWNTOWN &

PIONEER SQUARESEE PAGE 29

99

34

84

270

374

1,097

113

167

20

10

103

126

208

56 77

30

90

187

219

61

176

190

162

230

294

143242

335

464 480

340

433

430

80

38

While the velocity of apartment development in South Lake Union continues to outpace many neighborhoods, its pipeline is declining in deliveries after a decade of exponential growth. In 2019, 3,406 units were approved and under construction, with 5,000 units in review. By Q1 2020, the number of apartments approved and under construction dropped 36%, to 2,169, with the number of units in review remaining stagnant.

MICROHOUSING*

MIXED*

APARTMENT


See South Lake Union inset to the right of this map

K I N G C O U N T Y


Rainier Ave S

Jose Rizal B

ridg

e

7th

Ave

S

3rd Ave

6th Ave

Olive Way

Denny Way

Madison St

8th Ave

Fair

view

Ave

Westlake A

ve

Pine St

Pike St

Dex

ter A

ve

7th Ave

1st Ave

James St

Elliott Ave

5th Ave

Western Ave

Seattle Blvd S

5th

Ave

S

3rd

Ave

S

S Jackson St

S Royal Brougham Way

S Atlantic St

S Dearborn St

Yesler Way

Terry Ave

Blanch

ard St

Western A

ve

7th Ave

Marion St

S King St

Spring St

Ala

skan

Way

S

University St

Stew

art S

t

Elliott Ave

Vine

St

Clay S

t

Batte

ry S

tVine St

Pine St

Poplar Pl S

8th

Ave

S

7th

Ave

S

59

Belltown, Downtown & Pioneer Square

A greater number of large apartment developments are in Belltown and Downtown Seattle than the remainder of Urban King County.


12

0.1% of inventory



3,873 885 11,333 16,091

25% 6% 74% 104% of inventory

99CAPITOL HILL

SEE PAGE 31

ELLIOTT BAY

FIRST HILL & YESLER TERRACESEE PAGE 30

CENTRAL DISTRICTSEE PAGE 32

Midtown

Belltown

Downtown

Pioneer Square

International District

99

321

80

219

202

266

231

661

1,050437406312

454383

3790

428

40910

568

609250

69

105

149

186

180

59

283

156

112 212

285

324

170

119

463458

435233459

340

498

442

247

106 26

1,020

84

54

206

205

200

106

390

123

105

52% of the 25 largest developments in Urban King County are coming to Downtown Seattle. To put this massive supply into perspective, developers have proposed adding over 16,000 new units to less than one square mile of land between Yesler and Denny, West of Interstate 5. That’s a massive increase in density!

MICROHOUSING*

MIXED*

APARTMENT


K I N G C O U N T Y

30 KIDDER MATHEWS SIMON | ANDERSON TEAM 2020 APARTMENT MARKET STUDY12

th A

ve S

E Yesler Way

E James Way

Bro

adw

ay

Boren Ave S

Boren Ave

James St

S Jackson St

Yesler Way

12th

Ave

Jefferson St

7th Ave

9th Ave

Seneca St

11th Ave

8th Ave

7th Ave

10th

Ave

E Terrace St

Terrace St

E Seneca St

Boylston Ave

Spring St

Summ

it Ave

Jefferson St

Columbia St

E Union St

Alder St

Union St

9th Ave

Terry Ave

Minor Ave

University St

First Hill & Yesler Terrace

First Hill & Yesler Terrace continue a massive reinvention.


124

2% of inventory



2,023 0 2,520 4,543

29% –% 37% 66% of inventory

First Hill’s high-rise zoning and ideal location between Downtown jobs and the lifestyle-centric Capitol Hill neighborhood continue to draw the attention of apartment developers focused on high-rise construction.

Five years from now, Yesler Terrace will not look or feel the same as it once did. Expect development sites to continue going vertical and the emergence of a walkable neighborhood.

Interestingly, microhousing is severely under-supplied in First Hill, with small units representing only 2% of all existing inventory. The affordability and simplicity of microhousing appeals to medical workers and students who inhabit these neighborhoods, creating a unique opportunity for developers.

BELLTOWN, DOWNTOWN &

PIONEER SQUARESEE PAGE 29


60

91

548

486

288

335

215

226

135

275

204

85

19 19

300

119

365

352

261

160

E Madison St

E Union St

23rd

Ave

Bro

adw

ayB

road

way

E

E O

live

Way

E Pike St

E Pine St

E Thomas St

15th

Ave

15th

Ave

E

13th

Ave

Harvard

Ave E

E Roy St

Mel

rose

Ave

12th

Ave

E12

th A

ve

E John St

E Aloha St

22nd

Ave

E

E Denny Way

Co

ryel

l Ct E

17th

Ave

20th

Ave

E

18th

Ave

E

11th Ave

11th

Ave

E

14th Ave

10th

Ave

E

Bro

adw

ay E

Mal

den

Ave

E

Volunteer Park Rd

Bo

ylston A

ve

E Loretta Pl

E Howell St

Bel

levu

e A

ve E

Bellevue Pl E

Mel

rose

Ave

E

Yale Ave

E Thomas St

Bel

mo

nt P

l E

Belm

ont A

ve

Bel

levu

e A

ve

Minor A

ve

Sum

mit

Ave

E

E Republican St

17th

Ave

E

MICROHOUSING*

MIXED*

APARTMENT


First Hill

YeslerTerrace

K I N G C O U N T Y


E Madison St

E Union St

23rd

Ave

Bro

adw

ayB

road

way

E

E O

live

Way

E Pike St

E Pine St

E Thomas St

15th

Ave

15th

Ave

E

13th

Ave

Harvard

Ave E

E Roy St

Mel

rose

Ave

12th

Ave

E12

th A

ve

E John St

E Aloha St

22nd

Ave

E

E Denny Way

Co

ryel

l Ct E

17th

Ave

20th

Ave

E

18th

Ave

E

11th Ave

11th

Ave

E

14th Ave

10th

Ave

E

Bro

adw

ay E

Mal

den

Ave

E

Volunteer Park Rd

Bo

ylston A

ve

E Loretta Pl

E Howell St

Bel

levu

e A

ve E

Bellevue Pl E

Mel

rose

Ave

E

Yale Ave

E Thomas St

Bel

mo

nt P

l E

Belm

ont A

ve

Bel

levu

e A

ve

Minor A

ve

Sum

mit

Ave

E

E Republican St

17th

Ave

E

Capitol Hill

One of Seattle’s coolest neighborhoods maintains its appeal for new apartment development.

The development pipeline in Capitol Hill continues to grow, with an increased focus on smaller urban-infill sites adjacent to neighborhood amenities. The most sought-after sites are close to the light rail station, with 30% of the development pipeline located within a block of the station.

Capitol Hill provides for both a short commute to Downtown and easy freeway access to the Eastside, making it one of the most livable neighborhoods in the region.


511

3% of inventory



1,084 20 1,945 3,049

6% 0.1% 11% 17% of inventory

14MADISON

PARK


20

36

6138

36

71

30

74150

94

139

89

4476

36

15

95

36

47

50

37

14

68

3117

5029

62

91

53

60

51135

90

79

61

21

18

50

100151

34

20

1989 60

22

4134

117

36 58

MICROHOUSING*

MIXED*

APARTMENT



See magnified section to the left of this map

NORTH CAPITOL HILL & NORTH CAPITOL HILL & MADISON PARKMADISON PARK

See North Capitol Hill & Madison Park inset to the right of this map

K I N G C O U N T Y


Central District

Lines between the Central District and Capitol Hill continue to blur.


123

4% of inventory



1,164 34 1,539 2,737


"Active" is the key word for the Central District. In relation to the neighborhood’s total development pipeline, 43% of these units are currently under construction. However, with the other half of planned units in review, additional projects breaking ground will rely heavily on the speed of the City permitting these developments.

Much of the development pipeline is located south of Cherry Street and West of 23rd Avenue, clustered in new micro-neighborhoods emerging around Seattle University and Yesler Terrace. Expect density and amenities in these pockets to soon rival Capitol Hill.

E Madison St

E Union St

E Cherry St

E Yesler St

S Jackson St

E John St

32

nd

Ave E

E Denny Way

34

h A

ve

Martin

Luth

er Kin

g Jr W

ay

23

rd A

ve S

Lakeside A

ve S

12

th A

ve

18

th A

ve

31

st Ave S

LAKE WASHINGTON

FIRST HILL & YESLER TERRACESEE PAGE 30

CAPITOL HILLSEE PAGE 31

23rd A

ve Co

rrido

r

432

46

25

532

129

76

46

114

34

38

40

17

13185

30

285

206942195

369

MICROHOUSING*

MIXED*

APARTMENT


K I N G C O U N T Y


West Seattle

All eyes are on the City of Seattle as it determines how best to move forward with West Seattle Bridge repairs.


423

5% of inventory



249 35 2,280 2,564

3% 0.4% 29% 33% of inventory

HERE, Esri

0 0.3 km

0 0.2 mi1:18,050

SW Genesee St

Cal

iforn

ia A

ve S

W

39th

Ave

SW

35th

Ave

SW

SW Juneau St

SW Brandon St

SW

Ava

lon

Co

rrid

or

The Junction

SW Alaska St

WEST SEATTLE JUNCTIONWEST SEATTLE JUNCTIONELLIOTT BAY

ALKI

SEAVIEW

DELRIDGE

West Seattle Bridge

38

104

7532

35

306

9022

74

70

77

110

500

150

35 71

44

100

12

135

1515

4811

12

70

32

4424

3610 102

15

50

The West Seattle Bridge is likely not reopening until 2022 — a recent development that may have a major impact on near-term apartment fundamentals in West Seattle. Yet, apartment development patterns reflect trends of growth that took root over the last decade.

Two thirds of a l l planned development sites are currently focused around “The Junction” and the SW Avalon Way corridor. Demand in this area will be further driven by Sound Transit’s plan for the light rail to arrive in 2030. With 90% of the development pipeline still in review, developers will be paying close attention to the progress of light rail planning and construction, as well as bridge repairs, as they decide how best to move forward.

MICROHOUSING*

MIXED*

APARTMENT


See West Seattle Junction inset to the

right of this map

K I N G C O U N T Y


South Seattle

Neighborhoods south of I-90 continue to receive strong interest from apartment developers.


897

19% of inventory



1,287 406 3,965 5,658

27% 9% 84% 119% of inventory

LAKE WASHINGTON

BEACON HILL

GEORGETOWN

RAINIER VALLEY

For the second year in a row, South Seattle neighborhoods maintain a development pipeline surpassing 5,500 apartment units. Like other markets across the region, apartment developments are clustering around light rail stations and transportation nodes.

South Seattle boasts the second most microhousing units in the development pipeline, trailing only Ballard. Affordability and access to transit remain major factors of the impetus to develop apartment units in these neighborhoods.

SOUTH KINGSEE PAGE 42

MERCER ISLAND

SEE PAGE 36

176

19085

80

32

57

30

31

MICROHOUSING*

MIXED*

APARTMENT


See Mount Baker inset on the next page

See Columbia City inset on the next page

K I N G C O U N T Y


HERE, Esri

0 0.3 km

0 0.2 mi1:18,050

Rainier A

ve S

Martin Luther K

ing Jr W

ay S

S Genesee St

S Orcas St

S Graham St

S Alaska St

48

th A

ve S

38

th A

ve S

Lake Washington Blvd S4

4th

Ave S

42

nd

Ave S

COLUMBIA CITYCOLUMBIA CITY

HERE, Esri

0 0.3 km

0 0.2 mi1:18,050

S Holgate St

S McClellan St

S Spokane St

23

rd A

ve S

15

th A

ve S

Rainier Ave S

Martin

Luth

er Kin

g Jr W

ay S

S College St

S Hanford St

Beacon Ave S

15

th A

ve S


MOUNT BAKERMOUNT BAKER

312

150

43

15

160

6146

186

271 298

50

42

136

95 187

67 104

37

84

80

140

66

194

18

150

46108

35

73

2682

51

96

40

243

8032

80

45

10

271

55

25

73

168

28

93111

114

K I N G C O U N T Y


West Bellevue & Mercer Island

West Bellevue experienced major growth over the last year, led by developers pursuing luxury apartment projects in the core of Downtown Bellevue.


0

–% of inventory



897 0 5,811 6,708


Last year we were surprised by a relatively small development pipeline in West Bellevue, with fewer than 2,000 units in planning. As it turns out, our research did not totally capture a massive pre-development pipeline. This year, the total pipeline in West Bellevue shows an impressive 345% increase.

Given the massive pipeline of office development projects slated for delivery in West Bellevue, it stands to reason that these apartment projects will see extremely strong absorption upon opening.

155

NE 8th St

Main St

11

8th

Ave SE

Island

Crest W

ay

Bellevu

e Way SE

11

2th

Ave SE

LAKE WASHINGTON

EAST KINGSEE PAGE 41

MERCER ISLAND

WEST BELLEVUE

Mercer Island StationOpens 2023

South Bellevue StationOpens 2023

East Main StationOpens 2023

Bellevue Downtown Station Opens 2023

135

125

220

158

259

145189

165326

250 350

515

263

102

1,307

1,940

104

MICROHOUSING*

MIXED*

APARTMENT


K I N G C O U N T Y


Kirkland

Kirkland’s apartment development pipeline now outpaces Capitol Hill!

While apartment development sites are difficult to come by in Kirkland due to proscriptive zoning, large mixed-use projects are becoming increasingly more common and wildly successful.

Kirkland Urban, in downtown Kirkland, and Juanita Village, a block from the Lake in Juanita, are flourishing mixed-use centers driving additional apartment development activity in their respective neighborhoods. The development node forming around the Village at Totem Lake includes an impressive 2,100 units under construction and in review.

Expect the up-and-coming Rose Hill area to mirror these trends, as the Rose Hill Shopping Center development brings 875 new apartment units and reshapes its community.


0

–% of inventory



1,989 0 1,545 3,534


HERE, Esri

0 0.3 km

0 0.2 mi1:18,050

12

339

244202

395

70

142

173

875

133

NE 116th St

NE 124th St

NE 120th St

18th St

NE 85th St

NE 80th St

NE 100th St

98

th A

ve NE

NE

12

0th

Pl

Market St

LAKE WASHINGTON


DOWNTOWN KIRKLAND

JUANITATOTEM LAKE

134

406

409

MICROHOUSING*

MIXED*

APARTMENT


K I N G C O U N T Y


SUBURBAN KING DEVELOPMENT OVERVIEWThe trend of urbanization continues its expansion out of Seattle and West Bellevue’s neighborhoods, with the greatest benefactor markets located immediately to the north, east, and south. In other markets this might be considered sprawl, but developers are closely following demand in existing walkable suburban nodes, as well as the likelihood of these dynamics forming around light rail stations.

Year-over-year, the pipeline of new developments under construction and with permits in hand slowed, yet more units are in review than in previous years, demonstrating some moderation in deliveries in the next few years. A reduction in deliveries is likely well timed; however, we expect demand will outstrip supply in the next three to five years as more renters are looking for permanent communities where they can seamlessly transition from renter to homeowner.

Suburban King Development Pipeline

SNOHOMISH

EAST KING

SOUTH KING

URBAN KING

PIERCE

NORTH KING



PLANS APPROVED: 533 UNITS | 0.5% OF TOTAL INVENTORY


KITSAP

K I N G C O U N T Y


INVENTORY AS OF YEAR-END 2009 INVENTORY GROWTH: 2010 – 1Q2020 UNDER CONSTRUCTION

Auburn, Covington & Maple Valley

5,099 Units 622 Units 0 Units

Bothell & Kenmore 2,628 Units 1,749 Units 27 Units

Burien & White Center 4,135 Units 473 Units 0 Units

Des Moines & SeaTac 4,175 Units 308 Units 0 Units

East Bellevue & Newcastle 8,587 Units 2,270 Units 497 Units

Issaquah 2,553 Units 1,761 Units 135 Units

Kent 11,623 Units 1,083 Units 1,014 Units

North Bend & Snoqualmie 489 Units 100 Units 37 Units

North Seattle 10,290 Units 2,849 Units 655 Units

Redmond 7,119 Units 4,943 Units 2,280 Units

Renton & South Seattle 11,810 Units 1,896 Units 770 Units

Sammamish 835 Units 249 Units 0 Units

Shoreline 2,576 Units 857 Units 753 Units

Tukwila 3,017 Units 358 Units 0 Units

Woodinville 659 Units 382 Units 380 Units

NOTE: PIPELINE ONLY INCLUDES # OF UNITS CURRENTLY UNDER CONSTRUCTION. PROJECTS THAT ARE “APPROVED” OR “IN REVIEW” ARE NOT INCLUDED IN THIS CHART. CITIES NOT INCLUDED IN THIS CHART SAW NO DELIVERIES 2010 – 1Q2020 AND/OR HAVE NO UNITS CURRENTLY UNDER CONSTRUCTION.

SOURCE (INVENTORY AS OF 2010, INVENTORY GROWTH 2010 – 1Q2020): COSTAR

Suburban King Historical Deliveries & Construction Pipeline by City


56%

9%

9%

23%

59%

3%

21%

23%

47%

16%

38%

12%

82%

30%

1%

INCREASE OVER 1Q2020 INVENTORY

5%

3%

8%

6%

5%

19%

19%

22%

6%

37%

K I N G C O U N T Y


North KingMicrohousing Pipeline

738

4% of inventory



1,435 0 5,794 7,229


North King's urban nodes in Greenwood, Northgate, and Lake City continue to see robust apartment development. More recently, the imminent opening of light rail stations in Shoreline have spurred an increase in the development pipeline, now totaling over 10% of existing inventory.

522

522

99

LAKE WASHINGTON

Shoreline South Station Opens 2024

KIRKLANDSEE PAGE 37

BOTHELLKENMORE

LAKE FOREST

PARKSHORELINE

BITTER LAKE

LAKE CITY

NORTHGATE

GREENWOOD

Northgate Station Opens

2021

Shoreline North Station Opens 2024

24

40

141 203

27

23

19

20

158

330

243

164

27200

241

209

1,358

20

128

200

49 293

3929

54 5017

62 6530

57

145

72

181 235

410

22289

295

72

31 46104

159210

150

13073

69

16

MICROHOUSING*

MIXED*

APARTMENT


K I N G C O U N T Y



0

–% Of inventory



3,329 533 6,255 10,117


203

202

202

202


WOODINVILLE

REDMOND

SAMMAMISH

ISSAQUAHNEWCASTLE

DUVALL

NORTH BEND

NE Novelty Hill Rd

Avo

ndale Rd

154th Ave N

E

NE Union Hill Rd

140t

h A

ve N

E

132n

d A

ve N

E

NE 76th St

Bear Creek PkwyNE 70th Pl

Avond

ale

Rd N

E

West Lake Sam

mam

ish Pkwy N

E

NE 51st St

E Lake Samm

amish Pkw

y NE

148t

h A

ve N

E

NE Redmond Rd

196th Ave N

E

208t

h A

ve N

E

195t

h A

ve N

E

188t

h A

ve N

E

204th P

l NE

NE 83rd St

160t

h A

ve N

E154th Ave N

E

NE 95th St

NE 100th St

NE 90th St

185t

h A

ve N

E

170th Pl NE

NE Union Hill Rd

164t

h A

ve N

E

178th Pl NE

180t

h A

ve N

E

NE 65th St

156th Ave N

E

NE 80th St

NE 60th St

Willow

s Rd NE

188th Ave N

E

140t

h A

ve N

E

DOWNTOWN REDMONDDOWNTOWN REDMOND

Construction

992

Approved

0

In Review

1,637

Subtotal

2,629

W L

ake

Sam

mam

ish P

kwy N

E

NE 40th St

NE 20th St

156t

h A

ve N

E

148t

h A

ve N

E

Bel-Red Road

NE 12th St

116t

h A

ve S

E Main St

NE 8th St

NE 24th St

NE 40th St

NE 36th St

Nest 31st St

172n

d A

ve N

E

156t

h A

ve N

E

NE 21st St

173r

d A

ve N

E

NE 29th Pl

NE Spring Blvd

124t

h A

ve N

E

164th Ave N

E

NE 8th St

152n

d A

ve N

E

Nup

Way

134t

h A

ve N

E

140t

h A

ve N

E

120t

h A

ve N

E

Main St

116t

h A

ve N

E

136t

h Pl

NE

120t

h A

ve N

E

NE 6th St

181st Pl NE

181s

t Ave

NE

NE 27th Ct

176t

h C

t NE

160th Pl NE

NE 36th Way

157t

h Pl

NE

144th Pl NE

NE 31st WayNE 30th Ct

NE Turning St

NE 42nd St

182n

d A

ve N

E

178t

h A

ve N

E

NE 22nd Ct

166th Ave N

E

165t

h Pl

NE

171st Pl NE

163rd A

ve NE

162nd Ln N

E

164t

h Pl

NE

143r

d A

ve S

E

143rd A

ve NE

NE 11th Pl

NE 25th Pl

NE 38th Pl

NE 39th St

NE 31st Pl

NE 38th Ct

NE 34th St

NE 26th St

131st Ave N

E

Main St

128th Ave N

E

NE 14th Pl

124t

h Pl

NE

NE 3rd St

NE 9th St

SE 1st St

114t

h A

ve N

ENE 21st Pl

NE 18th Pl

NE 12th Pl

NE 16th St

NE 19th St

NE 14th St

Construction

2,096

Approved

533

In Review

1,492

Subtotal

4,121

EAST BELLEVUE / OVERLAKEEAST BELLEVUE / OVERLAKE

East Link Extension Opens 2023

Downtown Redmond Link Extension Opens

2024

204

443263

130

452

288

245

420 127

430

172

300

401

224

22

214

360

233

104

193

102

421

88

88

615

425

380

293135

176

425

87

195

354

331

98

300

80

9339

130

37

East King

Growth in East King is a direct result of strong economic drivers in Bellevue and Redmond.

Development continues to cluster around future light rail stations and areas that are highly accessible, since connectivity and ease of travel become increasingly desirable as our region continues to grow.

Even the sleepy mountain town of North Bend is experiencing new apartment development, with a recently completed 40-unit townhome project and another 130-unit apartment development in the works. A 35 minute drive to Seattle seems quite manageable when offset with fresh mountain air and limitless outdoor recreation in your backyard.

MICROHOUSING*

MIXED*

APARTMENT


See East Bellevue / Overlake inset to the

right of this map

See Downtown Redmond inset to right of this map

K I N G C O U N T Y


South King

Strong renter demand and a limited apartment development pipeline leave room for growth in South King.


0

–% of inventory



2,005 0 2,496 4,501


Approximately one-quarter of King County’s stock of apartment units are in South King. Accordingly, a development pipeline of fewer than 5,000 units accounts for only a small percentage of total inventory. However, extremely strong renter demand, coupled with little competition from modern apartment communities, results in a handful of new developers who are anxious to take advantage of these dynamics. Expect development to retain its focus primarily around key employment centers in Renton and Kent.

365

492

157

285

186

850

692

78

221

509

18

516

167

169

PUGET SOUND

KENT

AUBURN

SEATAC

BURIEN

TUKWILARENTON

MAPLE VALLEY

COVINGTON

FEDERAL WAY

DES MOINES


112

220

23

270

550

MICROHOUSING*

MIXED*

APARTMENT


K I N G C O U N T Y


04SNOHOMISH



SNOHOMISH COUNTYABOVE THE SHORE-LINE

For some time now, we’ve documented the trend of residents moving out of King County in search of more affordable locales to put down roots. What was once an easterly migration is now a northward movement, just across the county line. For those who work in Seattle, living in Lynnwood or Mountlake Terrace offers the shortest commute out of Snohomish County, and developers are still working to meet that demand. Lynnwood delivered the highest count of new apartment units in Snohomish County over the last decade, with additional developments still under construction or in planning. Mountlake Terrace is also making a valiant effort with a 38% increase to its current apartment inventory as 751 units currently under construction begin to deliver.

EVERETT’S TIME TO SHINE

Reliant on Boeing and entering the current market cycle with a healthy supply of 14,000+ apartment units, Everett (and North Snohomish as a whole) drew little attention from developers over the last decade. For the future-focused, however, this is not the time to count this sub-market out. Trends in 2019 show that employment is diversifying, county council is starting the process of identifying light rail station locations to direct new development long before transit delivers in 2036, and prescient developers are set to deliver 722 new apartment units to meet growing demand as a result of investment in the Port of Everett.


5,681TOTAL PIPELINE


EMPLOYMENT OVERVIEW

SNOHOMISH CONTINUES ITS UPWARD TRAJECTORY

Despite a rocky year for Boeing, Snohomish County’s largest employer, the county saw strong economic growth across our tracked metrics in 2019. This is a good indication of industry diversification increasing throughout the economic cycle. Additionally, as the cost of living continues to skyrocket throughout King County’s urban centers, many young families have ventured north to Lynnwood, Edmonds, and Snohomish for the opportunity to buy their first home

and take advantage of better pricing dynamics. These trends resulted in an overall increase for Snohomish’s employment, population, and personal income growth rates, while the unemployment rate ticked down from 3.7% to 3.1% year-over-year.

SNOHOMISH COUNTY

THE NATION





5.7% 3.0%

Total Employment

1.2M

1.1M

1M

900K

800K

700K

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

YEAR-OVER-YEAR % INCREASE CALCULATED FROM 2018 - 2019NO. OF PERSONS EMPLOYED


S N O H O M I S H C O U N T Y



2019 JOB POSTINGS

Varsity Tutors

Swedish Health Services

Express Incorporated

Amazon

Davita Incorporated

Premera Blue Cross

Languageline Solutions

The Boeing Company

Lowe's


0 100 200 300 400 500 600 700 800

AMAZON VENTURES NORTH

Amazon was busy in Snohomish County during 2019, breaking into the top 10 most active employers for the first time since we started tracking this data is 2017. This is largely due to Amazon’s new 100,000 square foot distribution center, which opened in Everett. Their presence is also felt in the automated delivery robot program that began in early 2019. Snohomish County’s pro-business environment may continue to draw employers north, a trend well demonstrated by employers venturing east of Lake Washington to Bellevue.

2018 JOB POSTINGS

Lowe's

State of Washington

Fluke Corporation

Emaint Enterprises

Dick's Sporting Goods

Snohomish County PUD

Premera Blue Cross

Tulalip Tribes

The Boeing Company


0 200 400 600 800 1,000 1,200 1,400




INCOME & INDUSTRY

Overall, the region continues to experience both employment and income growth, yet trade, aerospace, and government all remained relatively stagnant in total percentage of industry share, highlighting a trend for Snohomish County.

With Boeing facing significant headwinds for its manufacturing business, it is encouraging to see industry diversification beyond aerospace to offset Boeing’s near-term challenges. Year-over-year, we continue to track an increase in the percentage of the county’s growth associated with income produced outside the aerospace sector.

Median Household Income: Snohomish County vs. the Nation

County Employment Composition by Industry


Total Employment


13.8%AEROSPACE

13.8%GOVERNMENT

10.1%PROFESSIONAL & BUSINESS SERVICES

12.5%EDUCATION & HEALTH SERVICES

9.1%LEISURE & HOSPITALITY


1.3%NONDURABLE GOODS

8.4%CONSTRUCTION, MINING & LOGGING

3.0%OTHER SERVICES

1.7%INFORMATION

5.4%OTHER DURABLE GOODS

SOURCE: FRED

{{

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$90K

$80K

$70K

$60K

$50K

$40K

$30K

$23,705

$13,903SNOHOMISH COUNTY

THE NATION

Y-O-Y INCREASE Y-O-Y DECREASE NO CHANGE Y-O-Y



SNOHOMISH DEVELOPMENT OVERVIEW

The apartment development pipeline in Snohomish County remains one of the lowest in the quad-county region. It is the only market to experience a slow-down in the number of units in review, approved, and under construction.

Despite this trend, targeted areas for development carry common themes of both transit access and urbanization. Transit lines emanating from King County are connecting to future light rail stations in Mountlake Terrace and Lynnwood, and developers are responding accordingly with plans for new apartment communities.

Snohomish Development Pipeline

NORTH SNOHOMISH

KING

SOUTH SNOHOMISH



PLANS APPROVED: 0 UNITS | –% OF TOTAL INVENTORY





Arlington 428 Units 665 Units 0 Units

Bothell 2,800 Units 828 Units 70 Units

Edmonds 2,337 Units 312 Units 0 Units

Everett 14,106 Units 675 Units 914 Units

Lake Stevens 160 Units 591 Units 0 Units

Lynnwood 7,162 Units 1,357 Units 451 Units

Marysville 1,135 Units 650 Units 0 Units

Mill Creek 2,051 Units 180 Units 0 Units

Mountlake Terrace 1,829 Units 123 Units 751 Units

Monroe 503 Units 0 Units 0 Units

Snohomish 183 Units 0 Units 0 Units

Stanwood 241 Units 48 Units 0 Units



Snohomish Historical Deliveries & Construction Pipeline by City


30%

13%

5%

369%

19%

57%

9%

7%

20%


6%

5%

38%



While most developments in the county are still focused south and closer to the King County border, the few apartment developments planned in North Snohomish make up a considerable number of the county’s total pipeline. Affordable units make up nearly half of the pipeline, although several notable market-rate projects are also in the works along Everett’s waterfront and near Paine Field.

Redevelopment at the Port of Everett promises to revitalize Everett’s waterfront, and improved transportation will make this area increasingly accessible to King County commuters.

North Snohomish

North Snohomish’s apartment development pipeline remains steady, with a mix of both affordable and market-rate projects under development.


0

–% of inventory



914 0 984 1,898


HERE, Esri

0 1.25 km

0 0.75 mi1:72,200

9

POSSESSION SOUND

ARLINGTON

2

MARYSVILLE

SNOHOMISH

EVERETT

MUKILTEO

LAKE STEVENS

PAINE FIELD

192

140

266124

192

227

121

400

30

206


MICROHOUSING*

MIXED*

APARTMENT




0

–% of inventory



1,272 0 2,511 3,783


*DEFINITIONS FOR “EFFICIENCY” & “MIXED” DEVELOPMENTS AVAILABLE ON PAGE 62

522

999

96

527

524

CATHCART

NORTH KINGSEE PAGE 40

MALTBY

MONROEMARTHA LAKE

ALDERWOOD MANOR

LYNNWOOD

MOUNTLAKE TERRACE

EDMONDS

POSSESSION SOUND

NORTH SNOHOMISHSEE PAGE 52

112

South Snohomish

Development in South Snohomish continues to build momentum as the area establishes its own identity, distinct from Everett’s suburban sprawl and Seattle’s increased urbanization.

With its improving connectivity to Seattle, South Snohomish is an increasingly attractive location for developers. It continues to see a healthy influx of apartment supply, especially around the communities of Lynnwood and Mountlake Terrace.

Lynnwood’s retail core stands to benefit from the closure of other struggling malls in the region and is undergoing a major transformation, with new mixed-use projects at the former Sears sites at Alderwood Mall, Lynnwood Place, and Northline Village. Lynnwood’s Link light rail connection begins service in 2024, which will reduce commute times to Seattle to under 30 minutes, making Lynnwood a truly livable and convenient alternative to the region’s more traditional urban centers.

600151

123

70

328

192

240

1,370

349

360

MICROHOUSING*

MIXED*

APARTMENT




05PIERCE



PIERCE COUNTYREGIONAL TIDE LIFTS ALL BOATS

The story of Pierce County isn’t unlike that of other suburban markets across the Puget Sound. As Amazon and the Link light rail continue to move south, the effects are undeniable. While all employment and income metrics predictably followed suit, Pierce County registered 8.7% personal income growth from 2018–2019 — the highest rate across all markets in the Puget Sound. The existing light rail line in Downtown Tacoma opened in 2003, and planned developments are clearly focused around both existing stations and the Hilltop Tacoma Link Extension, which is expected to open for service in 2022.

MILITARY ACTIVITY CONTINUES TO SUPPORT GROWTH

Although healthcare systems remained the most active employers from 2018 to 2019, increased hiring activity among departments of the US Army demonstrates that Joint Base Lewis-McChord is still a crucial anchor for Pierce County. Those employed at JBLM continue to drive demand for new apartment inventory in the decidedly suburban cities of Pierce; however, rent growth in the region has yet to match the pace of other Puget Sound markets while construction costs remain at all-time highs. We predict the new decade will finally see rental rates that spur a development boom across Pierce County.


4,189TOTAL PIPELINE


EMPLOYMENT OVERVIEW

A ROCKETSHIP OF GROWTH

Pierce County experienced another exceptional year for employment growth (3.9%). Remarkably, personal income growth led all markets we measured, posting an exceptional growth rate of 8.7% — a 58% increase over 2018.

Private sector hiring clearly had a strong impact on incomes for residents of Pierce County, and security in public-sector defense jobs kept the overall economy stable. The county maintains the highest unemployment

rate in the region, yet given the uptick in employment year-over-year, it may simply be due to those not actively looking for work. For those seeking opportunities in Pierce County, jobs are available at increasingly higher wages.

PIERCE COUNTY

THE NATION





8.7% 3.0%

Total Employment

450K

400K

350K

300K

250K

200K

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

YEAR-OVER-YEAR % INCREASE CALCULATED FROM 2018 - 2019NO. OF PERSONS EMPLOYED


P I E R C E C O U N T Y



2019 JOB POSTINGS

Washington Department of Health

Kaiser Permanente

United States Department of the Army

US Army

Lowe's

Amazon

Catholic Health System

Highline Medical Center

Catholic Health Initiatives

Multicare Health

0 200 400 600 800 1,000 1,200 1,400

A TIGHTENING EMPLOYMENT MARKET

Like much of the quad-county region, Pierce County experienced a decreased number of job postings from major employers year-over-year. The top 10 most active employers of 2019 posted 1,554 fewer jobs compared to 2018 — a 28% decrease. Yet Amazon continued to expand outside of King County and jumped into the Top 10 as the company looks to expand their “last mile” presence throughout the Puget Sound region.

Another notable addition to the Top 10 in 2019 was the US Army, with two separate departments taking the places of 7th and 8th. Joint Base Lewis-McChord is currently staffed by 53,000 personnel, 14,000 of whom are civilians, making it the single-largest employer in the county and the second largest in the state. These jobs represent a cumulative $5 billion annual paycheck, the majority of which is invested right back into the Pierce County economy.

2018 JOB POSTINGS

Pierce County

Deaconess Hospital

Bethel School District

Pierce College

Tacoma General Hospital

Kaiser Permanente

Good Samaritan Hospital

State of Washington

Multicare Health System

Providence Health

0 500 1,000 1,500 2,000 2,500




0.8% INFORMATION

INCOME & INDUSTRY

Although Pierce County has a history of being one of the Puget Sound’s leading agricultural regions, it has seen strong urbanization over the past decade. Goods-producing industries all experienced a year-over-year decline, whereas most service providing sectors experienced strong growth over the same period.

This year we began tracking a new sub-market in our research, dividing Pierce County into “Suburban Pierce” and “Urban Tacoma.” The introduction of Urban Tacoma as its own market is warranted by increased interest in Tacoma’s downtown by employers and the commercial real estate community. Improvements to downtown parks, newly-opened retail concepts, hospitality development supporting the convention center, and construction to expand light rail access are all leading to increased demand and population growth — clear signs of future economic vibrancy in Urban Tacoma.

Median Household Income: Pierce County vs. the Nation

County Employment Composition by Industry Total Employment

SOURCE: FRED

$80K

$75K

$70K

$65K

$60K

$55K

$50K

$45K

$40K

$35K

PIERCE COUNTY

THE NATION

$18,576

$13,903 {{


18.3%GOVERNMENT

17.5%EDUCATION &HEALTH SERVICES



7.6%CONSTRUCTION, MINING & LOGGING


4.4%OTHER SERVICES


5.4%MANUFACTURING


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018



PIERCE DEVELOPMENT OVERVIEWPierce County is one of the few markets where apartment developers have not kept pace with the county’s growing economic fundamentals. With only 1,250 apartment units under construction, it is likely that demand will outpace supply in the next several years.

Relative to the overall county, Urban Tacoma will soon punch above its weight class. Each year, more and more apartment communities are planned for this rapidly expanding downtown, bolstered by urban amenities, including the extension of light rail lines.

Pierce Development Pipeline

SUBURBAN PIERCE

KINGKITSAP

URBAN TACOMA



PLANS APPROVED: 675 UNITS | 1% OF TOTAL INVENTORY






Pierce Historical Deliveries & Construction Pipeline by City


DuPont 232 Units 338 Units 0 Units

Fife, Edgewood, Milton & South Auburn


Gig Harbor 1,216 Units 237 Units 0 Units

Graham 165 Units 188 Units 0 Units

Lakewood, Parkland & University Place

10,784 Units 919 Units 126 Units

Puyallup, Sumner & Bonney Lake


Tacoma & Ruston 21,253 Units 3,107 Units 403 Units


30%

19%

114%

9%

19%

15%


1%

4%

2%




0

–% of inventory



981 84 1,462 2,527

2% 0.2% 3% 5% of inventory

512

167

16

163

7

410

509

Suburban Pierce

Pierce County historically looked to Tacoma for growth, but is now seeing an expanded apartment development pipeline in its flourishing suburban communities.


UNIVERSITY PLACE

LAKEWOOD MIDLAND

FIFELAKE

TAPPS

SPANAWAY

PUYALLUP

SOUTH HILL

ORTING

BONNEY LAKE

SUMNER

MILTON

COMMENCEMENT BAY

Following a year in which Tacoma’s development pipeline made up over 70% of apartment units under construction in all of Pierce County, Suburban Pierce hit the ground running in 2020, now comprising 78% of the county’s units under construction. Led by light rail extensions and the fastest-growing construction industry in the State of Washington, we stay bullish on Pierce County.

84

126

134

189 240

232

292

119

80

520

264

78

64 105

URBAN TACOMASEE PAGE 63

MICROHOUSING*

MIXED*

APARTMENT




MICROHOUSING*

MIXED*

APARTMENT Microhousing Pipeline

65

1% of inventory



269 591 802 1,662


E 11th St

Pioneer Way E

S 21st St

E Po

rtla

nd A

ve

S Stadium W

ayC

om

merce St

N 1

st S

t

S 11th St

Division Ave

S 12th StS 13th St

S J St

S 23rd StS Yakim

a Ave

Jefferson A

ve

Center St

S Unio

n Ave

S 19th St

S Sp

rag

ue A

ve

S BRd

way St

Martin Luther K

ing Jr W

ay

A St

S 6th Ave

E Marshall Ave

Linco

ln A

ve

Milw

aukee Way

Milwa Eells

Trans

N Frontage Rd

E G St

E D St

E 26th St

E 15th St

Do

ck St

A S

tE 23rd St

Market St

Saint Helens A

ve

Co

mm

erce St

Tacom

a Ave S

S J St

E L St

E Grand

view A

ve

E Roo

sevelt Ave

E 32nd St

E C St

E 34th St

S 27th St

E 27th St

E 28th St

S 25th St

S 15th St

S Trafton St

S Alder St

S St

ate

St

S Ced

ar St

N A

lder St

S Pr

oct

or

St

N U

nion Ave

N P

roct

or

St

S W

ilkes

on

St

S I St

S Pine St

S 9th St

McKinley Ave

E Portland Ave

S Lawrence St

S 18th St

111

158

229

115

247

180

93

115

283

131

MONROE

112

Urban Tacoma

Urban Tacoma is on the rise with an expanding and amenitized walkable downtown, invigorating redevelopment, and a nascent waterfront reinvention.

Traditionally, local, long-term investors dominated almost all investment activity in Downtown Tacoma. Today, with an apartment development pipeline of 1,600 units, it’s clear that outside capital is discovering a new future for this urbanizing market. Year-over-year, the apartment development pipeline more than doubled, demonstrating a bright future ahead!


Hilltop Tacoma Link Extension Opens 2022

Tacoma LinkOpened 2003

Tacoma Dome Extension

Opens 2030



IMAGE SOURCE: TOM COLLINS FLICKR


06KITSAP



KITSAP COUNTYFAST FERRY FACTS

Yes, we touted the Fast Ferry as a key indicator of economic growth in Kitsap County last year, but there’s new data (our favorite!). According to Kitsap Transit, overall ridership for the Kitsap Fast Ferry routes was up 61% in 2019 — the second full year of Fast Ferry service. Increased service resulted in 477,000 passengers traveling between Seattle and Kingston or Bremerton. Adding to the allure of Kitsap living, the ability to commute quickly and car-free for Seattle employees is sure to change the landscape of this decidedly suburban market.

PLANNING TO DELIVER

Although Kitsap County entered this market cycle with the smallest supply of apartment units and delivered the least units over the last decade, the current apartment development pipeline shines a different light on activity in the market. With 2,717 units in various stages of design, permitting, and construction, Kitsap has the potential to increase its total inventory of apartment units by an impressive 29% in the near future. Supported by the highest employment growth in the region, expect to see these developments come to fruition.


2,717TOTAL PIPELINE


EMPLOYMENT OVERVIEW

STEADY GROWTH IN EMPLOYMENT; POPULATION GROWTH LAGS

While indicators of a rising economy demonstrate steady growth in Kitsap County, signs still exist that population growth lags other nearby counties in the region. Results from the 2020 Census may help clarify if population is underreported.

As far as economic vibrancy, Kitsap County continues to display growth in key metrics: employment growth and personal income growth. The county certainly bests the national average in both categories, though it still faces competition within the region given the

overall economic dynamics in King, Snohomish, and Pierce counties.

More direct metrics in the apartment industry show that Kitsap renters have more buying power than they once did. In both newly built and recently updated apartments, rental rate levels are approaching and, in some cases, exceeding $2.00 per square foot.

KITSAP COUNTY

THE NATION





5.1% 3.0%

Total Employment130K

120K

110K

100K

90K

80K

70K

60K

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19


NO. OF PERSONS EMPLOYED


K I T S A P C O U N T Y



2019 JOB POSTINGS

Languageline Solutions

Harrison Medical Center

Kitsap Mental Health Services

Lowe's

Catholic Health System

US Navy

Amazon

Highline Medical Center


US Government

0 50 100 150 200 250 300 350

KITSAP’S EMPLOYMENT BASE EXPERIENCES DIVERSIFICATION

Although defense jobs with the US Navy and government continue to serve as leading employment sectors, Kitsap County is finally experiencing some diversification with its employment base. Amazon landed in the number four spot of Kitsap’s Top 10 employers based on job postings in 2019 with a new fulfillment center in Bremerton slated to open in mid-2020.

Fast Ferry service will undoubtedly continue to make Kitsap County a more affordable and increasingly convenient option to call home as traffic congestion to the north and south of King County is not slowing.

2018 JOB POSTINGS

State of Washington

Kaiser Permanente

General Dynamics

Suquamish Clearwater Casino

Kitsap Mental Health

AmeriCorps

Olympic College

Navy

U.S. Pacific Fleet


0 100 200 300 400 500 600 700




INCOME & INDUSTRY

Median household income in Kitsap County routinely outpaces the rest of the nation, yet in the last year it also outpaced Snohomish and Pierce counties. Such income growth demonstrates a sharper trend line than many otherwise expected, driven by increases in both professional service jobs and construction activity.

Although still dependent on military jobs, the county is well positioned for increased interest from employers seeking a more business-friendly environment and employees seeking affordability and lifestyle (and a short commute into Seattle, when necessary). The current rate of income growth in Kitsap County relative to the region bodes well for its future.

Median Household Income: Kitsap County vs. the Nation

County Employment Composition by Industry Total Employment

40.9%PRIVATE SERVICE PROVIDING

26.4%GOVERNMENT

10.2%TRADE, TRANSPORTATION & UTILITIES


4.0%CONSTRUCTION MINING & LOGGING

1.9%OTHER SERVICES


2.2%MANUFACTURING


$80K

$75K

$70K

$65K

$60K

$55K

$50K

$45K

$40K

$35K

$19,423

$13,903

{{

SOURCE: FRED

KITSAP COUNTY

THE NATION


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018



KITSAP DEVELOPMENT OVERVIEWOver the course of the next several years, Kitsap County has the potential to add triple the number of apartment units that were built during the last decade, expanding its overall inventory of apartments by 29%. Although the number of units planned is relatively small — under 3,000 units — the total inventory of apartments in Kitsap County does not yet top 10,000 units.

Apartment developers are finding opportunities across the county, with an even spacing of developments from Poulsbo to Port Orchard. Surprisingly, several of these developments are larger than 300 units, and many have terrific waterfront locations. Expect to see a “trickle effect” with developers adding new units in Pierce County as they discover more opportunities across Kitsap County.

Kitsap Development Pipeline

KITSAP

KING

SNOHOMISH

PIERCE


UNDER CONSTRUCTION: 417 UNITS | 4% OF TOTAL INVENTORY

PLANS APPROVED: 484 UNITS | 5% OF TOTAL INVENTORY






Kitsap Historical Deliveries & Construction Pipeline by City


Bainbridge Island 229 Units 196 Units 0 Units

Bremerton 4,152 Units 341 Units 417 Units

Port Orchard 1,559 Units 269 Units 0 Units

Poulsbo 554 Units 91 Units 0 Units

Silverdale 2,036 Units 0 Units 0 Units


8%

17%

16%

INCREASE OVER 1Q2020 INVENTORY9%



3

303

305

307

3

16

160


40

0.4% of inventory



417 484 1,816 2,717


MICROHOUSING*

MIXED*

APARTMENT

URBAN KINGSEE PAGE 22

ELLIOT BAY


NORTH KINGSEE PAGE 40POULSBO

SILVERDALE

BREMERTON

BAINBRIDGE ISLAND

PORT ORCHARDGORST

ERLANDS POINT – KITSAP LAKE

PORT ORCHARD

DYES INLET

216CROSBY

HOODCANAL

PUGET SOUND

Kitsap

Although high costs remain a barrier to new construction, growing demand in Kitsap County signals the potential for a future influx of active apartment development.

More apartment units are under development in Belltown than the entire inventory of apartments in Kitsap County, demonstrating the challenge of overcoming high construction costs so that suburban development makes financial sense.

However, given the success of many value-add projects across Kitsap County pushing apartment rental rates beyond the $2.00 per square foot mark, future development opportunities are evident. Looking to other suburban markets in the Puget Sound to predict future activity, we found that similar market dynamics were present just prior to the arrival of construction cranes. Keep an eye out across the Sound!

540

27

78

372

121

4478

336

120

1018


See Downtown Bremerton inset on

the next page



E Chester R

d

Wo

od

s R

d E

Bea

ch D

r E

Perr

y A

ve N

E

Tren

ton

Ave

NE

Harkins St

Whe

ato

n W

ay

Sheridan Rd

Lebo BlvdPi

ne R

d N

E

Tracyton Beach Rd NW

6th St

11th St

Kitsap Way

E Collins Rd

Paci

fic A

ve

Juniper St

Farragut Ave

1st St

S M

ario

n A

ve

Cam

bri

an A

ve S

Nav

al A

ve

Charle

ston

Bea

ch R

d W

Clare A

ve

Callahan Dr

E 30th St

Bre

mer

ton

Blv

d

Oys

ter

Bay

Ave

SN

Oys

ter

Bay

Ave

Rocky Point Rd

Russell Rd

Union

Ave

Roosevelt Blvd

Russell R

d

Auto Center Blvd

Rocky Po

int Rd

NW

Nat

iona

l Ave

N

Auto Center W

ay

Wencker Way

Higbee Rd

Sinclair Way

Werner Rd

Natio

nal Ave S

Pear

y Rd

1st St

Burwell St

Cal

low

Ave

S Decatur Ave

W H

ills Blvd

Birch St

Hom

er R

Jon

es D

r

Pend

erg

ast P

kwy

SINCLAIR INLET

DOWNTOWN BREMERTONDOWNTOWN BREMERTON

186

111

109

145

56

110

40



07DATA

SOURCES & DEFINITIONS


DATA SOURCES & DEFINITIONS

DATA SOURCES

DEVELOPMENT DATA

City of Bellevue - Major Projects List

City of Redmond - Projects Viewer

CoStar

Geographic Information Systems division of Kitsap County Application Services

King County Registrar

O’Connor Consulting

Seattle in Progress

Snohomish County Registrar

Yardi Matrix

EMPLOYMENT DATA

CoStar

Employment Security Department/LMEA

Federal Reserve Economic Data (FRED)

Kidder Mathews Research

DEFINITIONS

Congregate StandardAverageMinimum

140–200 SF175 SF 70 SF

A type of housing that has a private sleeping room and typically a bathroom, but is not a complete dwelling unit and may share a bathroom, common kitchen, dining room, and facilities with other units.

Allowed in certain zones

Micro Studios StandardAverageMinimum

150–250 SF200 SF90 SF

An apartment or townhouse dwelling unit consist-ing of no more than eight sleeping suites (private room with private bath) and one common kitchen or kitchen/lounge.

Not allowed (since 2014)

SEDU StandardAverageMinimum

240–320 SF275 SF240 SF

A very compact conventional studio apartment, complete with cooking and bathing facilities and closet space. The max gross floor area allowed is 320 SF — anything larger is an Efficiency Dwelling Unit (EDU).

Allowed

EDU StandardAverageMinimum

321–400 SF375 SF321 SF

A small conventional studio apartment with a main living space (“habitable space”) of no less than 220 SF.

Allowed

MICROHOUSING

MIXED DEVELOPMENTS

Mixed developments noted in this study comprise a unit mix of both standard apartment unit types and microhousing units (see definitions above).


THIS DOCUMENT WAS PREPARED BY KIDDER MATHEWS FOR ADVERTISING AND GENERAL INFORMATION ONLY. KIDDER MATHEWS MAKES NO GUARANTEES, REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, REGARDING THE INFORMATION, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF CONTENT, ACCURACY, AND RELIABILITY. ANY INTERESTED PARTY SHOULD UNDERTAKE THEIR OWN INQUIRIES AS TO THE ACCURACY OF THE INFORMATION. KIDDER MATHEWS EXCLUDES UNEQUIVOCALLY ALL INFERRED OR IMPLIED TERMS, CONDITIONS, AND WARRANTIES ARISING OUT OF THIS DOCUMENT, AND EXCLUDES ALL LIABILITY FOR LOSS AND DAMAGES ARISING THEREFROM. THIS PUBLICATION IS THE COPYRIGHTED PROPERTY OF KIDDER MATHEWS.© 2020 ALL RIGHTS RESERVED

Our team is focused on providing absolute best-in-class brokerage services to apartment developers, investors, and owners in Seattle and the broader Puget Sound region.

Although we have brokered hundreds of millions of dollars of apartment transactions over the years, our approach to the brokerage business is modern and dynamic. We perform all of the traditional tasks associated with apartment brokerage, yet our clients gain the advantage of modern advisory practices and services.

We think and act in terms of absolute market expertise, exposing arbitrage opportunities and achieving best-in-class sales results. We inspire trust and confidence in our guidance to the market by leveraging data and information to develop Profitable Insights™ on the market. Our clients excel by having an unfair advantage over the marketplace.

Let us turn our expertise into your profit!

DATA

INFORMATION

INSIGHTS

CO

MM

OD

ITY

BR

OK

ER

AG

E

Pro�table Insights VALIDATING INTUITION WITH DATA

We spend our time here!

SERVICES OFFERED

Sale of stabilized apartment buildings —

5 units to 500 units

Off-market pursuits of pre-sale & stabilized apartment buildings

Sale of development land, both apartments & mixed-use

Strategic disposition of apartment portfolios

Loan Brokerage for construction, bridge, and

permanent financing

KIDDER.COM

2020 APARTMENT MARKET STUDY

JERRID ANDERSON

Executive Vice [email protected]

DYLAN SIMON

Executive Vice [email protected]

DYLANSIMON.COM

SIMON | ANDERSON TEAM Employment & 2020 APARTMENT MARKET STUDY › wp-content › uploads › 2020...

Documents

Transcript of SIMON | ANDERSON TEAM Employment & 2020 APARTMENT MARKET STUDY › wp-content › uploads › 2020...