Published August 2006

Apartment market tightens
to 4.6% vacancy rate

SCBJ Staff

Snohomish County’s apartment market is feeling the squeeze, with the second-quarter vacancy rate dropping from 5.6 percent in the first quarter to 4.6 percent, according to apartment research firm Cain Inc.

The Seattle-based firm attributes the healthy rental market to continued job growth, inmigration and housing costs.

“The widening housing affordability issue caused by higher interest rates and surging home values is making renting the only housing option for more and more people,” the company said in its quarterly report. “Yet, since the rental market has been flat for the past five years or so, renting is attractive and affordable to many.”

The combined Snohomish/King County apartment market also noted increased demand, with the vacancy rate of 50-plus unit, stabilized apartment complexes dropping from 5.8 percent in the first quarter to 4.7 percent, according to Cain.

The vacancy rate for all properties in the two-county area, including those in lease-up and those that are currently out of service also declined, from 6.4 percent in the first quarter of the year to 5.1 percent, the real estate firm reported.

While Snohomish County’s vacancy rate of 4.6 percent bettered King County’s 4.8 percent, King County enjoyed a dramatic decrease in concessions, from $18 to $9. Snohomish County’s declined from $12 to $9. At this rate, overall concessions should disappear by the end of the year, according to Cain.

Snohomish County’s strongest submarkets were found in the north and east, including the cities of Arlington, Marysville and Monroe, reporting a 3.1 percent vacancy rate. The weakest submarket was Edmonds, which had a 5.6 percent vacancy rate.

Throughout Snohomish and King counties, a total of 223 newly constructed units were added to the inventory during the second quarter of the year. At the same time, however, 401 units were removed from the inventory through condo conversions in Everett, Kirkland, Issaquah, Seattle and Federal Way.

The two-county area’s second-quarter monthly average gross rent, excluding utility costs, was $886 per unit, up 2 percent from the first quarter’s $867, according to Cain.

For apartments with tenant-paid utilities, which constitute the vast majority of units, the average rent was $912 in King County and $807 in Snohomish County, with rents in King County increasing about a half a percent more than they did in Snohomish County.

“We anticipate that the 2 percent quarterly increase in rent levels that we have experienced this year will continue through the remainder of the year,” according to Cain.

The highest rents in Snohomish County were in Mill Creek south to Bothell, which also boasted the newest communities, with an average year built of 1993. Average monthly rents were $952, according to Cain.

Central Everett was the most affordable market, with rents averaging $618, but also had the oldest properties, with the average year built being 1973, the real estate firm noted.

Overall, demand for apartment investments in the region show no signs of letting up, Cain said, predicting “some exceptional years of net operating income growth.”

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© 2006 The Daily Herald Co., Everett, WA