Seattle & Puget Sound Apartment Market Dynamics

Posted In — Market Research | Trend Article

Despite the rockiness of the last 24 months, the Pacific Northwest remains one of the most robust economies in the nation. At the start of the decade, the strong growth that defined the previous decade was forecasted to continue through the next decade in a linear fashion. But then, the COVID-19 outbreak in the winter of 2020 put such prognostications into question. Even so, in 2021, the region proved any doubters wrong.

In fact, the strength of the Pacific Northwest economy was only bolstered by the events of the last two years and, as a result, the region is now stronger than ever. For instance, just a few years ago, Seattle was the crown jewel of the region, but now it’s joined by the up-and-coming downtown Bellevue economy, continuing its growth by leaps and bounds. The result is a supercharged regional economy boasting resilience and growth for decades to come.

As you will read in this report, renters and investors alike demonstrated a commitment to urban and suburban markets throughout the Pacific Northwest this past year. We invite you to draw your own conclusions, and then reach out to the experts on our team to learn more about how to seize opportunity in the Pacific Northwest apartment market.

Puget Sound

Once again, the Pacific Northwest demonstrated its significance as one of the most exciting – and investable – real estate markets in the nation.

Entering 2021, it was not expected (or even considered) that the region would end the year with rental rates nearly 13% higher, vacancy rates cut by 30%, and sales volume rivaling 2019 – the largest sales volume year on record. Yet, the vibrancy of the Pacific Northwest apartment market rang true and loud.

By nearly every metric we measured, the Puget Sound apartment market surged forward in 2021, demonstrating economic strength and investor confidence. Now, the question on the mind of most investors is: How much more will this market grow? Looking at office leasing activity, statewide in-migration, and the continued housing shortage, it’s clear that the Puget Sound apartment market has plenty of room to run.

Urban King

  • Historically in Seattle, apartment rental rates decline 5% to 10% during winter months in Seattle; however, in Q4 2021, urban markets experienced a decline of only 1.6%, with a handful of owners still increasing rents in Q4.
  • Seattle apartment rents in 2021 even outperformed 2019 – a surprise to many investors. Consequently, we’re bullish on continued rent growth once the majority of the workforce is back in 2022.
  • Last year, 5-50-unit apartment buildings are below 5% vacancy again, but rent growth lagged at just 2.2% year-over-year (y-o-y). At the same time, buildings with more than 50 units had vacancy rates higher than 6%, but rent growth was an astonishing 16.7% y-o-y.

North King

  • Although the number of transactions declined, sales volume dramatically increased – a result of larger institutional properties selling in North King County.
  • Within one year, vacancy dropped almost two percentage points, on average, from 6.6% to 4.8%. In turn, rental rates have increased by almost 10% from last year – signaling that people are moving back into Seattle.
  • Generally, newer apartment buildings are offering smaller unit sizes, but are still able to achieve a higher rent per square foot. Notably, vacancy is also higher, which is likely due to a combination of leasing up and tenants desiring more space – especially in these last couple of years. Accordingly, within the next couple of quarters, we expect vacancy to fall for all asset classes as people continue moving back to the city.

East King

  • It’s no surprise that East King leads all other regions, once again, with the highest average rent across all building ages at $2,200 per month – nearly $150 more than Urban King.
  • East King is a hotbed of apartment development activity, with nearly 1,400 units delivered across seven buildings in the last 12 months. Expect to see the number of deliveries increase year-over-year as developers continue to capitalize on low vacancy and skyrocketing rents, coupled with robust job and demand drivers.
  • Long gone are the days of new development centered solely in Bellevue, Redmond, and Issaquah. Now, developers are expanding along the I-90 corridor, with 100 townhome units delivered this past summer in Duvall, as well as nearly 350 units under construction in North Bend.

South King

  • South King County saw only 248 new units delivered in the past 12 months – leading to the sustained low vacancy rate of 3.6%.
  • As some of the larger tech headquarters begin reopening their doors, many workers are getting priced out of the Eastside and, as a result, are chasing more space and larger apartments in Renton.
  • With rumblings that the Southport office spaces could be occupied by a large tech tenant, as well as positive news regarding Boeing posting its first profits since 2019, Renton is becoming a more attractive destination for tenants and workers alike.


  • As a whole, Snohomish County did not feel the strain that other counties did within the Puget Sound. When everyone was leaving Seattle, they were heading north. Here, a steady increase in rents throughout the last couple of years has shown that Snohomish continues to grow and become a desirable destination.
  • In Snohomish County, vacancy declined a full percentage point (from 4.6% to 3.6%) this last year as people moved north looking for larger units, primarily due to working from home.

Urban Tacoma

  • As we’ve seen with Urban King County, Urban Tacoma saw a recent spur of suburbanization –pushing the vacancy rate above 6.3% for the first time since 2017.
  • With new deliveries along the Stadium/Hilltop LightRail station – as well as more tech startups entering (tech)oma – we expect demographics and the quality of tenants in urban Tacoma to continue to attract an increasing number of out-of-market investors.
  • Urban Tacoma will also continue to be an oasis away from Seattle, where tenants can get a big-city feel at a 35% discount from Seattle prices, as well as a 40% discount from East King County.

Suburban Pierce

  • Tenants chasing suburbia: It’s not just a story told in Seattle; Tacoma is seeing it, too. As the urban Tacoma rental market saw an uptick in vacancy, suburban Pierce County continues to see extremely low vacancy rates at 3.4%.
  • Notably, locations that were once feared are now being chased by Puget Sound investors. Specifically, markets like Lakewood, Parkland and South Tacoma are seeing consistent rent growth, thereby contributing to the suburban Pierce County market’s all-time high rent growth of 10% y-o-y.
  • Throughout the past two years, suburban Pierce has been low on vacancy and high on delinquency. Fortunately, we’re starting to see this delinquency flatten out and, with Pierce being a more landlord-friendly market than King, we expect this trend to continue.


  • The Kitsap market remains quite desirable to renters, apartment investors, and developers alike. Here, the expanding ferry and fast-ferry options make it continually easier for residents to travel to and from Seattle. There are even rumblings of a new, all-electric fast ferry in works.
  • Likewise, steady job and demand drivers; robust rent growth; and untapped development opportunities continue to lure developers across the Sound to the promised land. As a result, expect to see an increasing number of projects being proposed and breaking ground, as well as the sales of development sites to become more common.
  • During the last 12 months, Kitsap has experienced exceptional rental dynamics, with vacancy dropping 240 basis points to a healthy 4.5%, coupled with impressive and region-leading rent growth of 17%.

Read the full study at the link below.

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Simon | Anderson Multifamily Investments Team
Dylan Simon, Executive Vice President
Jerrid Anderson, Executive Vice President
Matt Laird, Senior Associate
Brandon Lawler, Associate Vice President
Winslow Lee, Associate
Max Frame, Associate
Jack Counihan, Associate | Financial Analyst

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