Developers have been opening 300,000 to 325,000 new luxury apartments every year across America since 2016. This pace is expected to continue throughout 2019.
The West Coast is an especially exciting market for multifamily, with many of the region’s municipal hubs ranking among America’s top locations for apartment construction and low vacancy rates.
Here’s an overview of some of the influential multifamily we’re watching in 2019.
Seattle
In 2018, Seattle ranked fourth in America for largest amount of multifamily housing construction. With a population smaller than rivals New York City, Los Angeles, and Dallas, vacancy rates have only climbed slightly, from 5.4% in Q4 2018 to 5.5% in Q1 2019.
A report by Yardi credits technology and e-commerce as fueling Seattle’s economy. “Seattle added 57,800 jobs in 2018, with nearly two-thirds in trade, transportation and utilities (16,900 jobs), professional and business services (11,900) and information (8,000)—the metro’s top-performing sectors. The future looks even brighter with Google, Facebook, WeWork, and Amazon announcing expansions. Amazon alone has more than 9,000 open positions in the metro.” In high demand by young professionals, Seattle’s unemployment is down and vacancies will be filled in the upcoming year, despite rising rental rates.
Portland
According to our data, the Portland multifamily market has had a substantial run-up in the current cycle, and that has extended into 1Q19. Vacancy rates are at 4.95 percent, and each unit type has seen quarter-over-quarter and year-over-year rental rate increases. Yet some headwinds indicate that the current development and investment cycle is entering the later stages. Homeownership rates are increasing, the rate of rent growth is declining, population growth rate is subsiding, and apartment construction is beginning to slow.
Fannie Mae reports that, while Portland’s “multifamily rental market remains healthy, expensive new supply continues to be delivered to the market, which is contributing to slowing net absorption. “ Job growth is expected to continue to attract new residents to Portland.
Oakland
Overall, the Bay Area’s economy continues to experience upward growth, and the multifamily market remains strong with high demand and a healthy development pipeline. Rising rental rates continue to affect the region, standing at an average of $2,740, up 3.7% from a year ago.
Oakland is at the heart of multifamily construction and growth. According to Real Page, apartment development has surged far beyond what this area is used to. Downtown Oakland is becoming a bustling hub for entertainment, dining and shopping.
“Thus far in the current economic cycle, apartment deliveries in Oakland/Berkeley have approached 6,800 units, swelling the existing base by 7.5%. A third of those completions came in the past year alone when deliveries totaled 2,051 units. This was a record for Oakland/Berkeley, the first time annual completion levels surpassed 2,000 units. Before this past year, annual new supply volumes in this submarket ran closer to the 600-unit mark, on average.”
This growth is showing no signs of stopping anytime soon. Currently, 6,400 units are under construction in the submarket. Real Page predicts that “these apartments under way are set to swell the existing base in Oakland/Berkeley by another 7.4%, well ahead of the 4.1% increase expected in the Oakland market, and notably beyond the 3.4% increase scheduled for the Bay Area overall.”
It’s Now or Never When it Comes To Investing In the West Coast
Rising rental rates and an influx of new residents above and down the Pacific Coast means that investing in these properties is only going to get more competitive as time goes on.
When you’re ready to take the leap, you’ll need the guidance of an expert with a track record of success. Kidder Mathews knows the West Coast. In fact, we’re its largest independent commercial real estate firm, with 800 local market specialists—senior level, top-producing professionals—serving out of 22 offices in Washington, Oregon, California, Nevada, and Arizona. The expertise of each local office is reinforced by the relationships, intelligence, and experience of our entire network.
Contact us and get the competitive edge you need.