Rents up, vacancies few

Renters have been saying loudly that rents are rising steeply and vacancies are few. Now comes fresh proof they’re right. Average rents in the…

By Elizabeth Rhodes
Seattle Times business reporter

Renters have been saying loudly that rents are rising steeply and vacancies are few. Now comes fresh proof they’re right.

Average rents in the region jumped almost 2 percent between the first and second quarters of this year and are now 9.1 percent higher than this time last year, reports apartment analyst Tom Cain, of Cain Inc. He surveys 149,000 King and Snohomish county apartments quarterly. The current two-county average is $1.14 per square foot, or $967 per unit. Meanwhile, the vacancy rate continues to drop, now at 4.24 percent for the two counties. Anything under 5 percent is considered tight.

“The rental market will continue to tighten as a result of job growth, in-migration and a combination of an insufficient amount of new construction to fill demand and apartments leaving the rental pool for conversion to condominiums,” says Cain, publisher of Apartment Insights Washington. Two areas — South Everett and Lynnwood — are leading with annual rent increases above 13 percent. Average rents in those communities are now $885 and $896 respectively for all size units combined, putting them still below the areawide average.

Four additional areas have seen rents climb 11 percent or more: East Bellevue, West Bellevue, Southwest Seattle and North Seattle between North 85th Street and North 145th Street. Some of these neighborhoods have lagged others in rent increases and are only now catching up. There are also some areas where increases have remained modest, Cain found. It’s “ironic,” he says, that affluent, fashionable Kirkland leads them.

Kirkland “has the unique distinction of having the highest rents and the highest vacancy rate over the past year,” he says. “It also has had the lowest annual rent increase on a percentage basis — 3.4 percent.” Cain attributes this to “price resistance among renters” who can find lower rents elsewhere. Kirkland’s average rent goes from $956 for a studio to $2,264 for a three-bedroom, Cain found. Compare that to nearby Redmond, where studios average $845 and a three-bedroom is $1,606.

Several other areas also reported below-average rent increases (but not necessarily below average rents). They are Des Moines, Kent, Sammamish, Issaquah, Arlington and Marysville. Each has experienced annual rent increases in the 5 percent range. In King County, the toughest places to find an apartment are in Seattle. The north-central part of the city has a vacancy rate of 1.88 percent — essentially a full house. Other neighborhoods with few vacancies are Queen Anne, Magnolia and Capitol Hill. South King County, from SeaTac to Federal Way, had above-average availability, with vacancies ranging from 4.5 to 6.3 percent. In Snohomish County, “Boeing’s Everett plant is having a substantial impact on this area,” Cain says, and that’s why its vacancy rate is falling faster than King County’s.

The tightest vacancy rate, 2.15 percent, was in Marysville and Monroe, he found. Eleven hundred apartments were converted to condos in the second quarter of this year. That’s slightly more than were replaced by new construction. “The level of converted units has surged in 2007,” Cain reports, with the highest conversion activity occurring on the Eastside. Seattle is a close second. Developers are constructing 2,231 units in properties with 50 or more units. Half are on the Eastside, 40 percent are in Seattle and the remainder are in South King County. An additional 8,000 units are in the planning stage.

Elizabeth Rhodes: erhodes@seattletimes.com

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