2024 Q1 Seattle & Puget Sound Apartment Market Dynamics

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Transaction volume is down across the board as buyers and sellers continue to struggle to find common ground on pricing. However, a slowdown in new construction bodes well for multifamily in the Puget Sound region.

  • Sales volume was down significantly year-over-year, both in terms of volume and transactions (-56% and -49%, respectively). In 2023, sales totaled $2.5B; for comparison, the annual average since 2017 was $5.7B. Given the uncertainty caused by the rapid rise in interest rates, buyers and sellers continue to struggle to find common ground and agree on pricing. Until we see several more months of interest rate stability, we may continue to experience sluggish sales volume.
  • Multifamily fundamentals in the region remain resilient despite challenges in the broader market. While overbuilding has been plaguing many markets in the South, there is little new construction breaking ground in 2024 in Puget Sound, so interest rates are the only real headwind facing the market once we clear the glut of units delivering this year and next.
  • Rental rates have continued to hold relatively steady throughout the last year. Specifically, the average rental rate in Puget Sound in Q4 was $1,927, which was down slightly (-0.7%) from the previous quarter, but up 1% from the prior year. That said, some stress could present itself if vacancy rates continue to rise.

Unlike most markets across the Southern and Eastern United States, the Pacific Northwest did not experience the same degree of overbuilding. While no market is immune to the effect of rising rates, Puget Sound multifamily fundamentals appear intact.


Relatively speaking, transactions in the Emerald City were somewhat defensive this year as investor interest remains strongest for central business district markets.

  • Sales across the country have been under significant pressure since the Federal Reserve began to aggressively raise rates in 2022. However, although transaction volume naturally took a hit in Seattle this year, sales were rather defensive here as compared to neighboring regions. Rental rates have continued to hold relatively steady throughout the last year. Specifically, the average rental rate in Puget Sound in Q4 was $1,927, which was down slightly (-0.7%) from the previous quarter, but up 1% from the prior year. That said, some stress could present itself if vacancy rates continue to rise.
  • Rent growth remained positive in Seattle after several years in a row of high deliveries. (From 2012 to 2022, supply grew by approximately 5% annually). Granted, with costs running high for developers, inventory under construction has slowed, and we don’t expect to see significant deliveries past 2024. We expect rental rates to remain flat in 2024 as the market absorbs new supply and employers take a pause on hiring for the time being.

North King

Paltry sales activity at levels similar to that of the Global Financial Crisis indicate continued uncertainty regarding an asset’s “fair price.”

  • Remarkably, North King saw no sales during Q4 2023. Furthermore, during the full year of 2023, sales fell to levels we hadn’t seen since the global financial crisis. Now, as interest rates continue to stabilize, we expect more agreement among buyers and sellers.
  • Multifamily buildings with more than 50 units saw a massive spike in vacancy in Q3. More precisely, vacancy was at 14% as 1,500 units were delivered in the quarter, equating to about 9% of supply. Then, as that influx of new supply has slowly been absorbed, rental rates have come under pressure in the area, ticking down 3% quarter-over-quarter to $1,867.

East King

Steady growth in rents and mixed signals in vacancy rates paint an unclear picture for the direction of East King’s multifamily market.

  • Sales continued their sluggish descent in Q4 2023 with only $123 million in volume, which was down 67% from Q4 2022. Yet, from an annual perspective, 2023 was not exactly an abnormal year for sales in East King, as this market is the least traded in the region.
  • Rental rates continued to tick up during the quarter, while changes in vacancy were mixed. For instance, within the five- to 50-unit product, vacancy has been on an upward trend, whereas vacancy has been in decline among buildings with more than 50 units.

South King

Limited cap rate expansion in South King is defying upward pressure from rising interest rates. Are investors pricing in stronger growth in this region?

  • While sales in South King demonstrated a decline similar to most other Puget Sound markets, cap rates stood out this quarter as remaining remarkably resilient: The average cap rate in Q4 2023 was 5.2% – flat year-over-year.
  • Rental rates have remained resilient in South King even as the vacancy rate steadily increased. Accordingly, with vacancy now at 6.9% for buildings with more than 50 units, we expect to see constrained growth in rental rates as we head into 2024.

Snohomish County

As rising vacancy rates begin to approach 7%, investors should keep a close eye on rental rates: At this level, we often find rents beginning to come under material pressure.

  • Sales volume in Q4 2023 was weak as only five buildings traded hands for a total volume of $29 million. However, unique among Puget Sound markets, 2023 sales in Snohomish outperformed those of 2020 – both in number of buildings and in dollars.
  • Steadily rising vacancy in both small and larger multifamily buildings has not materially undermined rent growth in Snohomish. However, with vacancy rates now in the mid-6% range, investors should keep an eye out for any further pressure on rental rates.

Pierce County

The recent rise in vacancy should come down throughout the next year as continued population growth fails to be met with additional supply.

  • The transaction environment in Pierce is currently challenged: Sales volume is down, prices are down (15% on a per-unit basis and 25% on a per-square-foot basis), while cap rates have shot up significantly. In particular, the average cap rate for transactions in Q4 was 6.2%, which was up 220 basis points year-over-year. Of course, while higher variance is to be expected with such a small sample size, annual figures paint a similar picture.
  • Although the lower rents in Pierce suggest the potential for more room to grow, there has been a meaningful jump in vacancy throughout the last year. That said, the lack of expected deliveries in the coming quarters suggest positive net absorption for 2024, as well as an overall decline in vacancy rates in the region.

Kitsap County

Transaction volume in Kitsap plummeted in 2023, but fundamentals appear intact with continued growth in rental rates coupled with declining vacancy.

  • Kitsap saw a dramatic decrease in sales volume in 2023 with no sales recorded during Q4. In this case, sales totaled $16 million (three buildings) for the full year of 2023, which was below levels seen during the global financial crisis and shortly thereafter. And, while a small multifamily market like Kitsap means there will be some more noise in the data, these figures are telling of the trepidation and uncertainty that many investors are currently feeling.
  • On the vacancy front, though, the picture is brighter as vacancy in both product segments (buildings aged five to 50 years and those older than 50 years) continued to tick down from a high in Q1 and Q2 of 2023. Additionally, because there is little new inventory currently under construction, we expect the market to further tighten as the population grows in the absence of appreciable additional supply.

About the Dylan Simon and Jerrid Anderson apartment brokerage team
The apartment brokerage team led by Dylan Simon and Jerrid Anderson of Kidder Mathews represents apartment investors, developers, and landowners in the sale, purchase, and financing of apartment buildings and development land across the entire State of Washington. The team of 10 brokerage professionals specializes in the sale and financing of apartment buildings and development land from $1 million to more than $100 million. For more information, visit simonandersonteam.com.

About Kidder Mathews
Kidder Mathews is the largest independent commercial real estate firm on the West Coast, with over 900 real estate professionals and staff in 19 offices in Washington, Oregon, California, Nevada, and Arizona. Kidder Mathews offers a complete range of brokerage, appraisal, asset services, consulting, and debt & equity finance services for all property types. The firm performs $10 billion in transactions, manages 51 million square feet of space, and conducts 2,600 appraisal, consulting, and cost segregation assignments annually (3-year average). For more information, visit kidder.com.

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Simon | Anderson Multifamily Investments Team
Dylan Simon, Executive Vice President
Jerrid Anderson, Executive Vice President
Matt Laird, First Vice President
Winslow Lee, Vice President
Max Frame, Vice President
JD Fuller, Associate

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